Value managers use many of the same numbers to evaluate a potential investment, although some give more weight to certain ratios than others. They look, for example, at the price of a company's stock relative to its earnings per share (price to earnings) and at the company's share price relative to its cash flow (price to cash flow).

Cash flow is the sum of a company's income plus depreciation plus amortization. Once you calculate that figure (or find it in a company's annual report), you divide the company's market value by its cash flow to determine its price-to-cash-flow ratio. "Some value investors prefer using price-to-cash-flow ratios to find bargain-priced stocks because cash flow is more difficult to manipulate than earnings," says James O'Shaughnessy, author of What Works on Wall Street.

Some value investors also look at a stock's current price divided by the company's book value per share (price-to-book-value ratio). A company with a low price-to-book-value ratio can theoretically pay for itself simply by liquidating its assets. Unfortunately, this is an area where companies sometimes engage in financial sleight of hand. "Asset values often show no relationship to their original cost, the price at which they could be sold or even their future replacement cost," says Janet Lowe, author of Value Investing Made Easy. "Nobody knows how much most assets will fetch in the marketplace until they are sold." Value-investing guru Benjamin Graham said a company should trade for less than 1.2 times its tangible book value per share. Many companies today trade at about three times book value.

Finally, a company's price-to-sales ratio measures the price of the company against annual revenues. You calculate it by dividing the company's stock price by its revenues per share. "Only hope and hype will increase the price of a stock with a high PSR," says O'Shaughnessy.

You don't have to be a fund manager to have access to the numbers required to calculate these ratios. You can find most of them in a company's annual report, in the daily newspaper and on the Internet.