For new investors when you go to finance sites like yahoo, msn etc and hear finance programs you here about all these financial ratios. Well, below is a link that explains these ratios quite nicely.

Ratio analysis (part of fundamental analysis) should only be part of your review. However, it is a great starting point to see if you should look at stock further. My preferred ratio to look is PEG (Price earnings to Growth). Basically this is a ratio looking at the ratio between the PE (Price to Earnings) and Earnings Per Share (EPS) growth. If it is less than 1, it means that the stock is undervalued in that it's earnings are growing faster than it's PE. This is a good sign and means the stock is worth looking into further.

PEG's can be backward looking (ie based on actual reporting earnings) or you may see future PEG ratio's which are based on analyst projections of earnings growth. Future PEG's are useful but they are based on a number of assumptions that you should be aware of.

For a full list and explanation of ratio's check out Investopedia's site.