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	How to Pick Good Stocks That Can Make You Rich

If you had adequate money in your hand, begin investing in stock and get higher cash flow. But even though you may be financially capable, you may be ignorant about essential things you should know while selecting good stocks. These are 3 essential financial ratios that you can use while evaluating stocks:

At least 10% Earnings per Share Growth Rate (EPSGR)

EPSGR is a rising value of Earnings Per Share (EPS) within specified period; which is usually a year. Stock with the highest EPSGR rises fastest in that year as compared to its competitors in the same industry. Maintaining 10% EPSGR regularly shows the company’s products are excellent and are widely in demand and economies of scale.

At least 10% Return on Equity (ROE)

Return on Equity (ROE) compares the company's net profits to its shareholders equity. ROE tells you your gain had you chosen to invest in the stock. Companies with higher than 10% ROE are using their shareholders' money to generate highest profits. Do not buy stocks with ROE below 5% since you can obtain the same return with no risk with cash deposit.

Highest 60% Debt to Equity Ratio (D/E)

D/E tells you the amount of debt the company is using to pay for its business operation. It is calculated by dividing the company's total debt by the total number of equity. For the company using a lot of debt to finance its operations, D/E is more than 1. It gives you an idea how immune the stock is when the interest rates rise. Always consider these important financial ratios altogether, since they give you an idea of the worth of your investment. However don’t ignore the quality too when finalizing your stock selection. After all, choosing good stocks needs time and effort.

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