3 easy ways to assess the performance of a company, organization

Trying to know how a company performs is not a very straight forward task. It has many factors to consider. But still when we would like to invest in a company, we cannot avoid the assessment of the company's performance. Else, there is a high possibility that we can be in a lost. Today, I have just 3 easy ways to access the performance of a company, organization, or any firms.

3 easy ways to assess the performance of a company, organization

Recalling from my financial management and banking course, there are quite a few methods of how we can assess the company performance. The information most people use to access the company performance is by looking at its financial statement and income statement. And that's what we are going to use for your assessment as well.

(1) Current Ratio
We need two information from financial statement to calculate this ration; we need current assets and current liability.
Here is how we calculate:

Current Ratio = Current assets/Current liability

This current ratio measure a company's ability to pay its current obligation or short-term debt, instant debt. If the ratio is great than 1, the company is doing good. If the ratio is less than 1, the company is facing problem. And if it is 1, it's doing normal.

(2) Net profit Margin
Two variable from the income statement is needed to calculate this. One is net income to common stocks holders and the other is Sales or revenue.
Here is how we calculate:

Net Profit Margin = Net Income to Common stocks holder/ Sales or Revenue

This measure the available profit after all the expenses are paid off. That profit will be available for investors. So, the more the better it is for investors.

(3) PE or Price per Earning Ratio
We need two information which you will have to look for from company's information pool. We need the share price and the earning per share.
Here is how we calculate:

PE Ratio = Price per share / Earn per share

This measure the willingness of investors to pay for common stocks for each 1$ of the company's earning per share. The higher ratio indicates that the company has a higher growth prospects. The opposite is applied for the lower ratio.

Sample Financial Statement and Income Statement