In the stock market, understanding the stock table and making investment decisions based on its result is very essential and requires little dedication. A look at a typical stock table presents us with some useful information that enables us make profitable investment decisions, forecast stock price and share price if only we can understand and interpret the headers. The headers in a typical stock table include;

> opening price

> closing price

> % change

> quantity traded

> value of shares

> Number of deals (or deals)

> year high

> year low

> E.P.S

> P/E ratio

OPENING PRICE:

This is the price at which the stock opened trading for the day. In other words, it is the price of the stock before the day's trading activity began. In most cases, this is usually the price at which the stock closed the previous trading day. But in some cases the opening price varies a little bit from the price the stock closed the previous day. It is important to note here that on the Nigerian stock exchange, there are five (5) trading days in a week, which are Mondays to Fridays excluding public holidays.

CLOSING PRICE:

Closing price is the price at which the stock under consideration closed for the day. i.e. this is the last price at which the stock was traded on the particular trading day. it is also important to note here that the price of a stock changes severally within a trading day due to forces of demand and supply. Say a stock opened at N10 and closed at N10.50 within a trading day, during the trading period, the stock might be sold and bought at different prices like N10, N10.25, N 10.40,etc before closing at N10.50. Therefore, your broker might buy or sell at any price between the opening and closing price depending on when he executed the transaction. It is also very important to state here that according to the present SEC rule, a stock cannot lose or gain more than 5% of is price within a trading day. This means that a stock that opened at N10 cannot go below N9.50 and above N10.50 within a trading day. Also, according to latest sec rule (2008), at least 100,000 units of a stock must be traded within a trading day for the stock to witness price change (increase or decrease)

% CHANGE:

This is called percentage change. This is the percentage change in the price of the stock. This is calculated by subtracting the opening price from the closing price to get the change in price. Multiply the change in price by 100,and then divide by the opening price. The figure is negative if the stock depreciated in price..

Example from

Opening price N10

Closing price N10.50

Price change = 10.50 -10 = 0.50

% Change = price change * 100/opening price = 0.50 *100/ 10 = 5%

QUANTITY TRADED

In some publications, this is called volume traded. The quantity traded represents the total units of the stock that was traded on that trading day.i.e the quantity of the stock that was bought/sold on that trading day. According to the new sec rule, this quantity traded of a stock must exceed 100,000 units for the price of the stock to change (increase or decrease). To some stock analyst, the quantity traded of a stock is an indication of the level of investor interest in the stock. The quantity traded of a stock is also seen as liquidity. This is one of the factors you look out for when buying a stock. Always buy a stock with high liquidity (large volume of quantity traded). Due to the high investor interest in the stock it is easier to sell because you easily get interested buyers.

VALUE OF SHARES:

This represents the total value of shares traded on a trading day. This is calculated by multiplying the quantity of shares traded by its price. Taking a look at wema bank, if the quantity traded is 100,000 and the price is N20,

Then for wema;

The value of stocks traded = 100000 * 20 = N2, 000,000.

NUMBER OF DEALS:

In some publications, this is referred to as deals. In stock trading, deals refer to the number of transactions that were made on a stock. This can also be understood as the number of times a stock was traded within a trading day. Some analysts argue that deals should be the main factor in determining the most traded stock rather than quantity traded because it is a more accurate measure of peoples (individuals and investors) interest in a particular. They base their argument on the fact that all the quantity traded of a stock can be done by one or few investors and so does not accurately measure investors interest. Hence, it should be noted that deals is a very important factor in determining the liquidity of a stock.

YEAR HIGH: Year high as represented on the stock table means the highest price at which the particular stock has been traded (bought or sold) within the year under consideration. From figure 1,it can be seen that the year high of NEM insurance is N5.59 even though its current price is N3.98. This means that from January 1st 2008 till now, the highest price NEM insurance has been traded is N5.59.

YEAR LOW:

Year low is simply the opposite of year high. It tells the lowest price at which a stock has been traded within the year. From the figure (figure 1) it is seen that though NEM insurance sells at N3.98 currently, previously within the year it had traded for as low as N2.80.

E.P.S:

This simply means earnings per share. This represents how much each unit of the stock earned. i.e. how much net profit each unit of the stock earned within the period under review. the EPS is calculated from a simple formula as follows:

EPS = net profit / Outstanding number of shares

Net profit means profit or revenue after tax and interest has been deducted from the profit. It is also referred to as profit after tax.

Outstanding number of shares means the number of ordinary shares issued by the company.

Earnings per share tells more about the profitability of a company especially when compared with their past results and that of other companies. Earnings per share are a very important factor in making investment decisions and also in calculating the P/E ratio, hence many investors pay adequate attention to this column.

If company A made a net profit of N1, 000,000

While their outstanding number of shares is100, 000.

Then EPS is N10. Applying the formula thus arrived this at:

EPS = 1000000 / 100000 = N10

P/E RATIO:

P/E ratio means price/earning ratio i.e. price to earning ratio. This is the ratio of the price of the stock to its earnings and it describes the relationship between the price of the stock and its earnings. You get P/E ratio by dividing the current price by the EPS. i.e.

P/E ratio = current price / E.P.S

This is about the most important factor to consider when making investment decisions because it tells you about the price of the stock and how much it has earned. A stock with low P/E ratio is highly preferred (better) to that with higher P/E ratio i.e. the lower the P/E ratio, the better. A high P/E ratio indicates that the stock is over priced. This means that the stock is priced more than its worth. a look at figure 2 shows that the P/E ratio of company C is 15.This is calculated using the formula above.

Current price = N30

Current EPS = N2

Hence P/E ratio = 30 / 2 = 15

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