Improve your investing decisions with this one ratio

Don’t be fooled by an attractive PER. Here’s a simple, easy and more reliable metric for your toolkit.

The financial media love to focus on net profit and its derivative – the price-earnings ratio (PER). Both, however, can lead you astray.

For one thing, accountants decide how to report profits, and some managements have a penchant for creativity. There’s more room to ‘fiddle’ with the income statement than with either the balance sheet or cash flow statement.

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