Financial
Sharpe Ratio
In order to be sound in your financial goals, you need to have a great source of knowledge on every possible investment practice and technique....
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Asset Coverage Ratio
This article covers the far-reaching topic of the asset coverage ratio. We’re talking about a risk measurement whose aim is to calculate a company’s capability...
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Average Time to Find a Hire
OKRs are the most prominent task and performance management tool that allows organizations to manage the overall performance of the employees. The HR department being...
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Cost per Hire
Cost per hire refers to the amount of money your company spends to hire recruiting talent. The total cost spent to recruit a talent covers...
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Knowledge achieved With Training
Each entrepreneur is concerned about the prosperity of their business. And a business’ prosperity is naturally linked with the productivity and preparation level of its...
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Percentage of Employees Trained in Company Culture
A company needs to perform well, and if you’re an owner, you know a lot about that. Not only you need to generate sales targets...
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Return on Assets
The return on total assets can show if the managing team is effective at earning money from the company’s assets in a certain amount of...
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Retention Ratio
The retention ratio or plow back ratio is the calculation that shows you exactly what percentage of your net income is retained for the business...
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Residual Income
Residual income refers to the amount of money that is left after all the expenses have been paid for a period. The residual income can...
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Receivables Turnover Ratio
To start with, the accounts receivable turnover represents an efficiency ratio. Thus, its main purpose is to assess the number of times a firm can...
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R-Squared (R2)
Also known as the coefficient of determination, r-squared is the statistical measurement that comes from the correlation made between the performance of a certain investment...
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Quick Ratio – Acid Test
The quick ratio, also known as acid test ratio, is used to measure a company’s ability to pay off its current liabilities when these come...
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Profit Margin Ratio
In order to measure the amount of net income earned by a company with each dollar sales that are generated we use the profit margin...
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Price to Sales
Also a financial metric, the price to sales ratio is used to measure the value that the investors put on a certain company for each...
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Price to Earnings P/E Ratio
In today’s post, we’d like to focus our attention on the price to earnings ratio. This is a prospect ratio that calculates a stock’s market...
Read morePrice to Cash Flow
The price of a company is compared to the underlying cash flow by using the Price to Cash Flow profitability ratio, also abbreviated as P/CF....
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Price to Book Ratio
The price to book ratio is renowned as an important financial valuation tool. Essentially, it is utilized in an attempt to appraise if a stock...
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Present Value (PV)
The present value is, many times, referred to as the discounted value – and it a widely used financial formula. So, what it is used...
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Preferred Dividend Coverage Ratio
This article will focus on presenting the specifications of the preferred dividend coverage ratio. This ratio assesses a corporation’s financial capability of paying the dividends...
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Payback Period
The payback period is a financial capital budgeting method that estimates the amount of time needed for an investment to generate cash flow and replace...
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Accounts Payable Turnover Ratio
The accounts payable turnover ratio is a liquidity ratio that indicates the ability a company has to repay its accounts payable. The repayment is done...
Read moreOperating Leverage
If you’ve accessed this page, you are probably eager to find out more about operating leverage. Well, operating leverage is a financial efficiency ratio that...
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Operating Income
If you clicked on this article, you’re probably interested in operating income and what it means. Well, it will tell you what you need to...
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Operating Cash Flow
If you’re a beginner when it comes to finances, you would probably want to know what the operating cash flow means. Basically, it’s an efficiency...
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Net Operating Profit After Tax
If you wanted to know what the Net Operating Profit after Tax is and how it works, you came to the right place. Net Operating...
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Net Working Capital
Ever heard the term “networking capital”, but you didn’t know what it means? If that’s the case, this article comes to your aid. The net...
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Net Profit Margin
The net profit margin is used to find out whether a business is poorly managed and to see future profitability. By comparing the total sales...
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Net Present Value (NPV)
The net present value is used to calculate the difference between the cash inflows and outflows of a potential investment or project. To make it...
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Net Operating Income
If you work for a real estate agency, you may have heard about net operating income. This is a profitability formula that is used to...
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Net Interest Margin
How well you administer your money is mainly up to you. However, the net interest margin ratio is a term that shows you how well...
Read moreNet Income
Net income also known as bottom line or net profit- is the amount of money that remains after you pay all debt and expenses within...
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Net Fixed Assets
Ever wondered how much 100 gums cost 20 years ago compared to today? Such calculations are simple, but for a company that could lose everything,...
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Return on Capital Employed
To better understand what the return on capital employed means, first we need to understand what the capital employed is. By employing capital, you will...
Read moreLong Term Debt to Assets
When it comes to being in debt, no one likes that, especially companies, where “profit” is the most used word. They may put you in...
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Marginal Revenue
This is a term used in microeconomics, and it’s quite a well-known formula. However, in order to get a better understanding of what marginal revenue...
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Margin of Safety
Everybody needs to break even, so this ratio will give you the insight of what goes too much or too little. In other words, the...
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Loan to Value
Abbreviated as LTV, the loan to value ratio is a risk assessment measurement. It is used to calculate the amount that has been loaned as...
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Internal Rate of Return
The internal rate of return, also abbreviated as IRR, is used to identify which future projects or capital investments will have an acceptable return –...
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Interest Coverage Ratio
The financial ratio known as interest coverage ratio determines whether a company is able to make interest payments on its debt or not and that...
Read moreGross vs. Net
Gross and net usually refer to income and it is also something that seems quite difficult to understand for some people. For example, you might...
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Gross Profit
The profitability ratio called gross profit (also known as gross profit margin) is used to calculate the percentage of sales that are exceeding the costs...
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Goodwill to Assets
The financial measurement called goodwill to assets is used to compare the intangible assets of a company – like a customer list, brand name, and...
Read moreFree Cash Flow
Usually abbreviated as FCF, the Free Cash Flow is an efficiency as well as a liquidity ratio. It calculates how much money a company is...
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Fixed Charge Coverage Ratio
Whether a company is able to pay off its fixed charges or expenses with its own income or not – before income taxes and interests...
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Fixed Asset Turnover Ratio
If you’re wondering what this ratio is, you’re just about to find out. It’s an efficiency ratio that measures a firm’s return on their investment...
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Return on Equity
Before we engage in explaining the formula, you need to know what the difference between a shareholder and a stakeholder is. A shareholder holds a...
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Expense Ratio
Have you heard the term “expense ratio”, but it confused you? In that case, you’ve come to the right place, because you’re going to find...
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Return On Invested Capital
If you are the accountant of a business, there are certain things that you may want to keep in mind –one of these things being...
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Equity Ratio
An equity ratio calculates the number of assets financed by owners’ investments. Basically, it does so by comparing the total equity in the company to...
Read moreReturn on Investment
As an investor, you will want to know that the company you are placing your bets on will bring a high return. Regardless of you...
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Return On Net Assets
RONA - It may sound like some fancy name for a fancy person, but it’s actually the name of a finance formula – albeit one...
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Equity Multiplier
You may be wondering what equity multiplier means. Well, it’s a leverage ratio that basically measures the part of the company’s assets financed by equity....
Read moreReturn On Operating Assets
A company needs a fair number of operating assets in order to continue functioning. This is practically what keeps the company going. The return on...
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Return On Retained Earnings
The amount of money you allocate for the growth of the company tells a lot about the growth potential of a company, as well as...
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Return on Sales
This financial ratio is used to show how efficient a company is at using its revenue in order to generate profits. Also called the operating...
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Rule of 72
If you want to see for how long you have to invest your money in order to double it, with a given interest rate, then...
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Sales to Admin Expenses
This efficiency ratio is used to measure if a company is efficient at managing its non-operating expenses in order to generate sales during the normal...
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Enterprise Value explained
The enterprise value (EV) is a direct representative of the economic value of a company – in other words, how much money someone would have...
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The basics of EBITDA
When you want to understand how a certain company thrives in a particular industry, you need to have certain formulas in mind. An acronym for...
Read moreSortino Ratio
The Sortino ratio is an alternative to the Sharpe ratio, as it isolates the effects volatility has on investments. This ratio is used to determine...
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EBITA and how It works
EBITA, short for Earnings before Interest Taxes and Amortization, is a formula that calculates the operational profitability of a company by including the costs of...
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Times interest Earned Ratio
Also called the interest coverage ration sometimes, the times interest earned ratio is a coverage ratio. It can calculate the proportionate amount of earnings that...
Read moreUnderstanding EBIT
Shortened from Earnings before Interest and Taxes, and also referred to as the operating income, is an equation that measures the operating profits of a...
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Treynor Ratio
Also known as the reward to volatility ratio sometimes, the Treynor ratio is basically a risk assessment formula. It can estimate the volatility in the...
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DuPont Analysis – The Basics
While the name may sound very fancy, this is actually a crucial method to understand the finance point of a company. Also referred to as...
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Dividend Yield
Every fundamental analysis tool works differently for every investor – so in order to understand the stocks, you need to know how to calculate them...
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Dividend Payout Ratio
The DPR (Dividend Payout Ratio) is the dividend amount that has been given to shareholders as payment – and which is in direct relation with...
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Working Capital Ratio
If you’re here, it’s because you are most likely curious about what the working capital ratio is and how it works. Also called the current...
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Defensive Interval Ratio (DIR)
The defensive interval ratio is considered to be one of the most valuable liquidity ratios. Expressly, it focuses on calculating how many days it takes...
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What Is the Debt to Income Ratio?
The debt to income ratio is considered to be a valuable number – some people even say that it is as important as one’s credit...
Read moreThe Debt to equity ratio: what you should know
The debt to equity ratio is another important liquidity ratio. Fundamentally, it compares a firm’s total debt in relation to its total equity. The debt...
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The debt to capital ratio
An important liquidity ratio, the debt to capital ratio measures a company’s strategy when it comes to using its financial leverage. More specifically, it compares...
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Defining the debt to asset ratio
To begin with, the debt to asset ratio could be defined as a leverage ratio, calculating the total amount of assets financed by creditors, as...
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The Debt Service Coverage Ratio (DSCR)
The debt service coverage ratio is another financial ratio that provides insight into a company’s financial situation. Expressly, it determines a company’s capability of covering...
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Debt Ratio
Today, we will concentrate our attention on the debt ratio – a solvency ratio whose purpose is to measure a company’s total liabilities as a...
Read moreInventory Turnover Ratio
Now we’ll look into the efficiency ratio that is the inventory turnover ratio. This ratio is used to determine whether the inventory of a business...
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Days Sales in Inventory
How many days will it take for your company to sell its entire inventory? Well, if you have no idea, then you can calculate the...
Read moreDays Payable Outstanding
This financial ratio compares the cost of sales, accounts payable, and the number of bills that remain unpaid in order to calculate the average time...
Read moreCurrent Ratio
The current ratio refers to a company’s ability to use its current assets in order to pay off its short-term liabilities. This ratio is labeled...
Read moreCost of Goods Sold
Also abbreviated as COGS, the cost of goods sold measures the direct costs that were sustained during the production of products that were sold during...
Read moreCorrelation Coefficient
The statistical measure of the association or dependence of two numbers is known as the correlation coefficient. Also known as Pearson correlation, it can appear...
Read moreContribution Margin
The difference between a company’s total sales revenue and variable costs is also known as a contribution margin. Sometimes used as a ratio, it shows...
Read moreCash Ratio
A company’s ability to pay off its current obligations with cash equivalents or cash only is determined with the help of the cash ratio, also...
Read moreCash Flow Coverage Ratio
Naturally, a company must be able to pay off its obligations with the operating cash flows it has. This ability is measured with the help...
Read moreCash Earnings/ Share
A company’s financial performance can be measured by using a certain profitability ratio, namely, Cash EPS, which is more commonly known as Cash Earnings per...
Read moreThe Cash Conversion Cycle
The odds are that you’ve stumbled across the term cash conversion cycle, and you want to comprehend its individual specifications. This is what we’re going...
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The Capitalization Ratio
The capitalization ratio, also referred to as the cap ratio, represents a financial ratio that measures a firm’s solvency. It does that by calculating the...
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Break-Even Point Analysis
To start with, the break-even point analysis represents a measurement system that determines the margin of safety. It does this by comparing the revenues or...
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Average Payment Period – The Specifics
Also known as an important solvency ratio, the average payment period (APP) assesses how much time it takes for a business to pay its vendors,...
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Average Inventory Ratio
The purpose of this article is to explain the characteristics of the average inventory ratio, how to calculate the ratio, and why it is utilized....
Read moreAsset Turnover Ratio: The Basics
The asset turnover ratio is a widely used efficiency ratio that analyzes a company’s capability of generating sales. It accomplishes this by comparing the average...
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Accumulated Depreciation Ratio Explained
In today’s post, we will focus on explaining the specifics of the accumulated depreciation ratio. We’re talking about a fixed assets ratio that calculates the...
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