For many experienced investors, they often use price performance index to help them analyze and estimate the value of stocks. What you need to know is that you can learn the strategy to make your investment advantageous. The following details will guide you to understand and master the basic knowledge and principles of value maximization and cost performance.

What you need to know is that it is critical to consider other financial indicators before estimating the cost performance ratio. Calculating the cost performance ratio is not a trouble for estimating the stock value. You need to provide sufficient data for the calculation process, such as the market value of companies issuing shares. You need to simply rely on the product of the number of companies' shares on the stock market and the stock price to get the market value. Finally, you need to divide the market value index and the annual turnover to get the cost performance ratio.

I want to tell you clearly that you can't just rely on the price performance index to make a corresponding judgment. You need to use more and more detailed information to help you build an investment thinking model. In addition, you can use the value just calculated to compare the companies you want to invest in. For example, if the cost performance ratio you get is very low and the company you invest in is developing well, your investment choice may be a good idea.

According to the comments of some investment experts, they believe that investors should focus on the cost performance ratio rather than the stock price when investing. One thing you need to understand is that you should not only focus on the business situation and earnings of a company. You need to know that the development and potential of a company cannot depend on its financial position or profits. You can judge whether they will be competitive in the market in the future by knowing the performance price ratio of their stocks. For example, science and technology companies or biological companies generally have very little income or even loss in the early stage of development. However, every investor who invests in these companies will not give up supporting them.

You can judge whether some stocks are growing by the cost performance ratio. You can buy stocks with low performance price ratio because it means that you may buy stocks with high value in the future at a very low price.

You need to introduce the debt situation of companies as a reference for your investment judgment. I know you must want to buy companies with low cost performance and almost no debt. However, you need to know that some companies do have low cost performance, but they may be burdened with huge debts.

In conclusion, the estimation method of calculating the cost performance ratio can help you analyze the situation of the stock market. However, cost performance is not the only factor you need to consider and its disadvantage is that it is too single. Just focusing on the cost performance ratio does not allow you to make an accurate judgment on a company. You need to think more and understand the details.

（Writer：Frid）