The price to book ratio or P/B ratio is a metric that reflects how the market price reflects the current book value of the business shares. The Price to Book ratio measures the number of times the market price of the company’s shares exceeds the book value of the business. What is the Price to Book
Net Present Value (NPV)
Net Present Value (NPV) is a measure that estimates the expected profitability of a project based on its forecasted cash flow stream and the initial cost of such project. A positive Net Present Value (NPV) indicates that the project, considering the time value of money, covers the initial investment and can be therefore accepted by
Long Term Debt to Asset Ratio
The Long-Term Debt to Asset Ratio is a metric that tracks the portion of a company’s total assets that are financed through long term debt. This ratio allows analysts and investors to understand how leveraged a company is. What is the Long Term Debt to Assets Ratio?Contents1 What is the Long Term Debt to Assets
Interest Coverage Ratio
The interest coverage ratio is a measure that indicates how many times the business’ Earnings before Interest and Expenses (EBIT) cover the company’s interest expenses. The Interest Coverage Ratio is a debt ratio, as it tracks the business’ capacity to fulfill the interest portion of its financial commitments. What is the Interest Coverage Ratio?Contents1 What
Debt to Equity Ratio
The debt to equity ratio is a metric that tracks how leveraged a company is by estimating how many dollars of debt it has for each dollar of equity. The Debt to Equity Ratio is employed as a measure of how risky is the current financial structure, as a company with a high degree of
Current Ratio
The current ratio, sometimes called the quick ratio, is a liquidity ratio that measures a company’s coverage of its current liabilities by its current assets. It tracks the short-term solvency of the business by assessing the number of times the short-term assets, those that will be converted into cash in less than 12 months, cover
Average Collection Period
Average collection period is a measure of how many days it takes a firm, on average, to collects its receivables. It indicates the efficiency of the collection process and the lower it is the shorter the cash cycle of the business is, which has a positive impact on its profitability. What is the Average Collection
Market Capitalization
Market Capitalization, or simply market cap, is a measure of how much a company’s current outstanding shares are worth. It is an estimation that employs the current price of a business’ shares to determine the total value of its equity instruments, including both common and preferred shares. What is Market Cap?Contents1 What is Market Cap?2
Break-Even Analysis
Break even analysis is an estimation that intends to find the particular number of units or the amount of revenues that need to be produced in order to achieve a profit of zero. The break-even point is achieved, therefore, when total revenues are equal to the sum of both variable and fixed costs. The volume
Capital Asset Pricing Model (CAPM)
The Capital Asset Pricing Model (CAPM) is a mathematic formula that intends to determine the appropriate cost of equity to be employed to discount future cash flows, in order to estimate their present value. It combines different referential rates such as the risk-free rate and the overall market rate, along with risk indicators, to identify
