Market capitalisation is the market's estimate of a company's value, based on perceived future prospects, economic and monetary conditions. It is a measurement of corporate size equal to the share price times the number of shares outstanding of a public company.

The amount of fixed assets (like plant and machinery) owned by the company less the accumulated depreciation expenses that have been charged to the profit and loss account over the years.

Practical Use
Net Block is what the assets are worth today.

Net Current Assets, also known as Working Capital indicates the amount of capital that is utilized by the company in financing its day-to-day operations.

Net Profit Margin or Net Margin as it is often called, tells us how much of each dollar/rupee of sales a company keeps as earnings, after paying all the costs of doing business.

Practical Use
Net Margins vary drastically across industries and sometimes even among individual companies in an industry. It is useful to examine the trends over the years – is the company becoming more or less efficient in managing its business.

Net Worth is also known as Shareholders' Equity, and is equal to Total Assets minus Total Liabilities and it represents the part of the company owned by shareholders

Operating Cash Flow measures how much cash a company generates from its business. It is the true touchstone of corporate value creation because it shows how much cash a company is generating from year to year.

Practical Use
One could first look at the statement of cash flows first when evaluating a company to see how much cash it is throwing off, then look at the balance sheet to test the firmness of its financial foundation, and only then look at the profit and loss account to check out the margins and the like.

Operating Profit is Sales Turnover minus all operating expenses. It represents the profit the company made from its actual operations as opposed to interest income, one-time gains and so forth. It can also be calculated by deducting Other Income from PBIDT.

Operating Margin is a measure of the operating efficiency of the company. Higher, the better.

Practical Use
Operating Margins vary across industries and sometimes even among individual companies in an industry. It is useful to examine the trends over the years – is the company becoming more or less efficient in managing its business.

This number in the P&L Account is used to represent income from activities other than normal business operations such as investment interest gains, foreign exchange gains, rent income, profit from the sale of non-inventory assets and the like.

Practical Use
Always a good practice to check that Other Income is not what is responsible for a company’s growth in earnings, which may be one-off and not sustainable.

Another common valuation measure is price to book ratio (P/B), which compares a stock’s market value with the Book Value on the company’s most recent balance sheet. The idea here is that future earnings or cash flows are ephemeral, and all we can really count on is the net value of a firm’s tangible assets in the here-and-now. Legendary value investor Benjamin Graham, one of Warren Buffet’s mentors, was a big advocate of book value and P/BV in valuing stocks

Similar to the price to earnings ratio, this measure provides an indication of relative value comparing the financial health of a company. Because it deals with cash flow, the effects of depreciation and other non-cash factors are removed.

Practical Use
Price-to-cash flow is particularly favoured to value companies in the "hard asset" business -- gold, oil, and real-estate companies, for example.

The most popular valuation measure - the Price to earnings ratio or the P/E ratio, can take you pretty far as long as you are aware of its limitations. The nice thing about P/E is that accounting earnings are a much better proxy for cash flow than sales, and they are more up-to-date than book value. Moreover earnings per share results are easily available from just about any financial data source imaginable, so it’s an easy ratio to calculate.

The easiest way to use a P/E ratio is to compare it to a benchmark, such as another company in the same industry, the entire market, the industry average, or the same company at a different point in time. Each of these approaches has some value, as long as you know the limitations.

Practical Use
A company that’s trading at a lower P/E than its industry peers could be a good value, but remember that even firms in the same industry can have very different capital structures, risk levels and growth rates, all of which effect the Price to Earnings ratio.

The PEG ratio is an offshoot of the P/E ratio that’s calculated by dividing a company’s P/E by its average EPS growth rate. The PEG is extremely popular with some investors because it seeks to relate the P/E to a piece of fundamental information – a company’s growth rate.

Practical Use
On the surface, this makes sense because a firm that’s growing faster will be worth more in the future, all else equal. The problem is that risk and growth often go hand in glove. – fast-growing firms tend to be riskier than average. This conflation of risk and growth is why the PEG is so frequently misused. When you use a PEG ratio, you are assuming that all growth is equal, generated with the same amount of capital and the same amount of risk.

The most basic ratio of all is the Price to Sales ratio, which is the current price of the stock divided by sales per share. The nice thing about the P/S ratio is that sales are typically cleaner than reported earnings because companies that use accounting tricks usually seek to boost earnings. In addition sales are not as volatile as earnings –one time charges can depress earnings temporarily, and the bottom line of economically cyclical companies can vary significantly from year to year.

However the P/S ratio has one big flaw. Sales may be worth a little or a lot, depending on a company’s profitability. If a company is posting billions , but it is losing money on every transaction, we would have a hard time pinning an appropriate P/S ratio, because we have no idea what level (if any) profits the company will generate.

Also called Net Profit, this number represents (at least theoretically) the company's profit after all expenses have been paid.

Practical Use
Although it’s the number all companies highlight in their earnings releases, don't forget that it can be wildly distorted by one-time charges and/or other Income. Also, one should look at cash flow statement first to determine whether the company is generating cash at the operative level.