**Day 8**

Let me make this as simple as possible for you.

**P/E (Price to Earnings)**

**The question it answers:**

Is this shop cheap or expensive?

**Simple meaning:**

How much money do you pay to get 1 naira of profit from the shop?

**Example:**

• The shop makes 10 naira in profit.

• People are rushing to buy the shop for 50 naira.

That shop is expensive.

If people are paying 20 naira to earn that same 10 naira profit, that shop is cheap.

✅ **Low P/E = Cheaper shop.**

📌 **P/B (Price to Book)**

**The question it answers:**

If this shop closes today, is it worth more than the price?

**Simple meaning:**

Is this shop selling for less or more than what it owns and is worth?

**The shop owns:**

• Cash

• Buildings

• Cars

• Machines

**Total = 100 naira**

However, people are selling the shop for 60 naira.

That shop is cheap.

✅ **P/B below 1 = Buying cheap things cheap.**

📌 **EBITDA**

**Big word, simple meaning:**

Does this shop really make money every day?

**Simple meaning:**

How strong is the shop at making money from daily business?

**Forget:**

• Loans

• Tax

• Accounting tricks

**Just ask:**

Is this shop really busy? Is it bringing in cash?

✅ **Higher EBITDA = Strong business.**

All good stocks must answer "Yes" ✅ to the three categories above before you consider buying them.

**EBITDA** (Earnings Before Interest, Taxes, Depreciation, and Amortization).

See you on Day 9