The Accounting Rate of Return (ARR) is an accounting metric that measures the profitability of an organization by comparing the profit before interest and taxation to the capital employed over a specified period. Commonly used variants include profit after interest and taxation and average capital employed for the period.
The Accounts Receivable Collection Period measures the average amount of time it takes for a company to collect payments from its credit customers. This is a crucial metric for analyzing a company's efficiency in managing its receivables and cash flow.
The Accounts Receivable Turnover ratio is a financial metric used to measure how effectively a company is managing and collecting its receivables.
The acid-test ratio, also known as the quick ratio, is a liquidity metric that assesses a company's ability to cover its short-term liabilities with its most liquid assets.
After-tax cash flow in real estate refers to the net cash flow from an income-producing property after accounting for income taxes. It includes the tax savings from any losses that can be offset against other income.
The rate of return on an equity interest, taking into account financing costs and income tax implications of the investor.
Alpha measures the excess returns on an investment relative to the market returns. It represents the amount of return expected from fundamental causes like the growth rate in earnings per share. It contrasts with Beta, which measures volatility.
The amount of one, often referred to as the 'compound amount of one', is a financial metric used to determine the future value of a single sum of money invested at a particular interest rate over a specified period.
The Average Collection Period is a key financial metric that measures the average number of days a company takes to collect payments from its credit customers.
Average Fixed Cost (AFC) is a financial metric in economics which is calculated by taking the total fixed costs (TFC) of production and dividing them by the total output (Q) produced. AFC helps in understanding how fixed costs are spread across units produced, giving insights into the cost structure of production.
An accounting term referring to a calculated measure used to compare bonds of varying durations and repayment schedules by averaging the periods for which funds are available, weighted by the amounts available in each period.
Basic Earnings Per Share (Basic EPS) is a financial metric used to measure a company's profitability on a per-share basis, without considering any dilutive effects from convertible securities or options.
A benchmarking study compares actual performance to a standard of typical competence, utilizing a standard unit for the basis of comparison, such as the 3-month federal Treasury Bill rate for U.S. interest rates.
Book value represents the net asset value of a company, calculated as the total assets minus intangible assets and liabilities. It provides a historical measure of value and is frequently compared to market value to gauge intangible assets' and management's effectiveness.
A measure of possible worst-case losses in excess of the average used in banking to calculate both capital adequacy requirements and certain performance measures, such as risk-adjusted return on capital (RAROC). It is usually based on the value-at-risk (VaR) methodology.
Capital cover is a crucial financial metric indicating the capital value of a portfolio relative to the capital sum required to finance it. It serves as a risk assessment tool, with lower capital cover indicating higher investment risk.
In the manufacturing industry, the cash cycle represents the interval between the outlay of cash to procure raw materials and the receipt of payment for the manufactured goods produced from them.
Cash earnings refer to the income that a business generates from its operations after accounting for cash revenues and cash expenses, specifically excluding noncash expenses such as depreciation.
The Collection Ratio measures the efficiency of a company's ability to collect its accounts receivable. It indicates the average number of days it takes to convert receivables into cash.
The single periodic rate of growth for several periods, typically years, which accounts for cumulative growth in a manner similar to compound interest.
The contribution margin ratio, also known as the contribution-to-sales ratio, production-volume ratio, or profit-volume ratio, is a financial metric that shows the relationship between a product’s contribution margin and its sales value. This ratio is essential for ranking products based on their relative profitability.
The rate of return that a company's shareholders expect for holding stock in that company, used as part of the calculation of the total cost of capital for a firm. It represents the opportunity cost to investors of holding shares. The cost can be calculated by a formula dividing dividends per share by the current market value and adding the dividend growth rate.
A key financial metric representing the direct costs to an organization of supplying goods or services, used to calculate gross profit by deducting this figure from sales revenue.
Creditor-days ratio provides an estimate of the average number of days credit an organization takes before paying its creditors. It's an essential measure of financial stability and cash flow management.
Current yield is the annual interest on an investment divided by its market price, providing a snapshot of the bond’s rate of return relative to its current price rather than its face value or yield to maturity.
In capital budgeting, the cutoff point is referred to as the minimum acceptable rate of return on investments that an enterprise mandates for its projects. It essentially serves as the threshold for determining the viability of a project.
Days' Sales in Receivables is a financial metric that indicates the average number of days it takes a company to collect payment after a sale has been made. This ratio helps businesses understand the efficiency of their credit and collection processes.
Days' Sales Outstanding (DSO) is a financial metric that indicates the average number of days it takes for a company to collect payment after a sale has been made.
The Debt-to-Equity Ratio is a financial metric that indicates the relative proportion of shareholders' equity and debt used to finance a company's assets.
Diluted Earnings Per Share (EPS) is a metric that evaluates a company's earnings performance for each outstanding share, considering the worst-case scenario of dilution from convertible securities, options, and warrants.
Dilution refers to the reduction in earnings per share (EPS) and book value per share that occurs when convertible securities, such as convertible bonds and preferred shares, or warrants and stock options, are converted into common stock.
Discounted Present Value (DPV) is a financial metric used to determine the current worth of a series of future cash flows, discounted back to their present value. It helps in evaluating the profitability and feasibility of investments and projects.
Dividend cover, or dividend coverage ratio, is a financial metric indicating how many times a company can pay dividends to its ordinary shareholders out of its net profits after tax in the same period. It measures the sustainability of dividend payments.
The Dividend Payout Ratio is a financial metric that shows the percentage of earnings a company pays to its shareholders in the form of cash dividends. It helps assess a company's maturity and capital allocation strategy.
The Dividend Requirement refers to the amount of annual earnings that a company needs to allocate in order to pay dividends on its preferred stock.
Duration is a measure often used in fixed-income investing to assess the sensitivity of a bond's price to changes in interest rates by calculating the average life of the discounted values of the cash flows associated with a bond.
A crucial metric in assessing a company's core operating performance by excluding the effects of finance and tax expenses from operating profit calculations.
Earnings Before Taxes (EBT) measures a company's profitability, calculated as sales revenues minus cost of sales, operating expenses, and interest expenses, before taxes have been deducted.
Earnings Per Share (EPS) is a commonly used metric in financial analysis to measure the profitability of a company by dividing its net income by the number of outstanding shares of common stock.
A comprehensive metric frequently used to measure the value of a business in its entirety, incorporating both equity and debt.
A financial metric that shows the ratio of a company's equity to its debt, providing insights into how a company finances its operations and growth.
The Equity Yield Rate measures the rate of return on the equity portion of an investment, accounting for periodic cash flow and proceeds from resale, but excluding income taxes.
The expense ratio is a financial metric that measures the ratio of operating expenses to gross income for real estate properties or the percentage of total investment paid by shareholders for mutual fund operating expenses and management fees.
Forward P/E is a valuation measure used by investors to gauge the price of a company's stock relative to its expected earnings per share over the next 12 months.
Free Cash Flow (FCF) is a crucial financial metric that indicates the amount of cash generated or consumed by a company after accounting for capital expenditures. It is instrumental for assessing a company's ability to pay dividends, reduce debt, acquire other businesses, or invest in growth opportunities.
A comprehensive overview of FTSE Indexes, including their types, historical significance, and relevance to investors and portfolio managers.
Funds From Operations (FFO) is a key measure used to determine the profitability and performance of a Real Estate Investment Trust (REIT).
Gross amount refers to the total amount of something before any deductions are made for costs, taxes, or losses. For instance, gross revenues do not take into consideration factors such as taxes, depreciation, and other costs.
The total of the gross dividends paid by a company in a year divided by the total number of ordinary shares on which the dividend is paid.
Gross dividend yield represents the annual dividend income received from a security as a percentage of its current market price before the deduction of any taxes or charges.
Gross margin represents the percentage of total sales revenue that a company retains after incurring the direct costs associated with producing the goods and services it sells. It is a critical metric for assessing a company's financial health and operational efficiency.
The gross margin ratio, also known as the gross profit percentage, is a financial metric that measures the proportion of money left over from revenues after accounting for the cost of goods sold (COGS). It is a critical indicator of a company's financial health and its ability to manage production costs.
Gross Profit Margin is a financial metric used to assess a company's financial health and its efficiency in generating profit from revenue. It represents the percentage of revenue that exceeds the cost of goods sold (COGS).
Growth rate is a metric that illustrates the amount of change over a period in certain financial characteristics of a company, such as sales revenue or profits. It is usually expressed as a percentage and can be compared to the Retail Price Index or another inflation measure to evaluate the company's real performance.
Headline Earnings Per Share (HEPS) is a financial metric provided by the Chartered Financial Analyst Society to give a clearer picture of a company's earnings by including specific trading profits and losses while excluding certain non-recurring events.
Historical Yield refers to the return on investment provided by a mutual fund, typically a money market fund, over a particular period of time. For instance, a money market fund may advertise that its historical yield averaged 4% over the last year.
Interfirm comparison is a process used to evaluate the performance of similar organizations by analyzing their accounts and statistical data through ratio analysis.
The Internal Rate of Return (IRR) is a financial metric used to evaluate the profitability of an investment by calculating the rate of return where the net present value (NPV) of cash flows equals zero.
Inventory turnover, also known as stock turnover, is a ratio that measures the frequency with which items of stock are used or sold annually.
A liquidity ratio is a metric used to determine a company's ability to pay off its short-term liabilities as they come due using its most liquid assets.
The loss ratio measures the ratio of losses incurred (or loans losses for banks) to either total premiums earned by an insurer or the overall receivables or debts for a corporation within a specific period, often one year.
The margin of profit is a financial metric that reveals the relationship between gross profits and net sales. It is used to evaluate a company's profitability by expressing gross profit as a percentage of net sales.
The Market Price to Book Ratio is a financial metric used to compare the market value of a company's stock to its book value, offering insights into how the market perceives the value of the company’s net assets.
Market value is a critical financial metric, reflecting the current price at which an asset or service can be bought or sold in a marketplace. It is widely used in trading and investing to determine the 'fair price' of a property, stock, or currency.
The Market-to-Book Ratio (M/B ratio) is a financial valuation metric used to compare a company's current market price to its book value, providing insights into how the market values the firm's assets.
The mean return is a key metric in security analysis, representing the expected value or average of all possible returns on investments within a portfolio. It is also used in capital budgeting to determine the mean value of the probability distribution of possible returns.
The net asset value (NAV) represents the per-share value of a fund's assets minus its liabilities, used to measure the performance of mutual funds, ETFs, and similar investment vehicles.
Net Income Per Share, also known as Earnings Per Share (EPS), is the amount of profit or earnings allocated to each share of common stock after all costs, taxes, depreciation, and possible losses have been deducted.
The net margin ratio, also known as the net profit percentage, measures how much of each dollar of revenue earned by a company translates into actual profit after all expenses are deducted.
Net Operating Income (NOI) is a critical metric in the real estate industry that assesses the profitability and financial health of income-generating properties. By calculating NOI, investors can evaluate the operating performance of properties without considering financing, taxes, or capital expenditures.
Net Present Value (NPV) is a financial metric that measures the value of an investment or project by calculating the present value of expected future cash flows, discounted at a specified rate.
Net Realizable Value (NRV) is a key metric in inventory accounting that measures the estimated amount a business expects to receive from the sale of inventory, minus any estimated costs to complete the sale.
Net Working Capital (NWC) is a financial metric that represents the difference between a company's current assets and its current liabilities. It highlights a firm's short-term financial health and operational efficiency.
Net worth represents the total value of an organization after deducting its liabilities from its assets. This financial metric is crucial for assessing the financial health and stability of an entity.
Net yield is the return on an investment after all expenses, taxes, and costs have been subtracted. It provides a more accurate measure of an investment's profitability than gross yield.
A foundation used to calculate a company's earnings per share (EPS) focusing only on the constant elements in the company's tax charge; often contrasted with net basis.
Operating ratios are financial metrics used to measure and analyze a company's operational efficiency by relating various income and expense figures from the profit and loss statement to each other and to balance sheet figures.
The payout ratio represents the percentage of a firm's profits that is distributed to shareholders in the form of dividends. This metric provides insight into how much money a company returns to its shareholders compared to how much it retains for reinvestment and other corporate purposes.
In finance, a point has different implications depending on whether it is used in relation to bonds, real estate, commercial lending, or stocks. Understanding these distinctions is crucial for comprehending various financial metrics and transactions.
The Price-Earnings (P/E) Ratio is a financial metric that measures a company's current share price relative to its per-share earnings. This ratio is widely used by investors and analysts to evaluate the valuation of a company's stock.
The Price-Earnings (P/E) Ratio signifies the price of a stock divided by its earnings per share (EPS), acting as a multiple. It offers insights into market expectations regarding a company’s future earning power.
The Price/Book Ratio is a financial metric used to evaluate if a stock is undervalued or overvalued by comparing the stock's market price to its book value per share.
The Profit-Sharing Ratio (PSR) is a financial metric used to define how profits or losses are distributed among partners or stakeholders in a business or investment.
Profitability and profitability ratios are essential metrics used to measure the efficiency and success of a business in generating earnings relative to various financial aspects like sales, assets, and equity.
The Profitability Index is a financial metric used to evaluate the profitability of an investment or project, calculated by dividing the present value of future expected cash flows by the initial investment.
Financial metrics used to measure a company's ability to generate profit relative to other key variables, such as sales, assets, or equity.
RAROC, or Risk-Adjusted Return on Capital, is a financial metric used to determine profitability considering the risk taken by a firm. It assesses the returns, adjusted for risk, on the capital invested.
A rate is a quantity or amount measured with respect to another quantity or amount. Often used to denote interest rates, exchange rates, or other financial metrics, it serves as a basis for determining charges or payments.
The rate of turnover, also known as the turnover ratio, depicts how frequently some part of the assets of an organization is turned over (i.e., replaced by others of the same class) within a specified period, typically a year.
The Real Rate of Return is an investment's annual percentage profit that is adjusted for changes in prices due to inflation or other external factors. Unlike the nominal rate of return, which does not account for inflation, the real rate of return provides a more accurate measure of purchasing power.
Return on Equity (ROE) is a financial metric that assesses a company's ability to generate profit from its shareholders' equity. It is calculated by dividing net income by shareholders' equity.
Return on Invested Capital (ROIC) is a profitability ratio that assesses how efficiently a company uses its total capital—including common and preferred equity as well as long-term funded debt—to generate profits.
Return on Investment measures the profitability of an investment. It is a ratio that compares the gain or loss from an investment relative to its cost.
Running yield, often referred to simply as yield, is a financial metric used to measure the annual income generated by an investment relative to its current market price.
Sales Margin Volume Variance, often referred to as Sales Volume Variance, in standard costing, measures the adverse or favorable variance arising from the difference between the actual number of units sold and those budgeted, valued at the standard profit margin.
Selling Price Variance is a financial metric that measures the difference between the actual selling price of a product and its budgeted or standard selling price, multiplied by the actual number of units sold.
The budgeted revenue from an operation less the standard operating cost.
Taffler's Z Score is a financial metric used to predict the likelihood of a company going bankrupt within a year, specifically tailored to UK-based companies. It is often compared to other financial distress prediction models, such as the Altman Z Score.
Terminal Value (TV) is an essential financial metric used to estimate the value of a business beyond the forecast period in a discounted cash flow (DCF) analysis.
The Throughput Accounting Ratio (TAR) is a key metric in Throughput Accounting, used to assess the value that an investment or business decision will create relative to its costs.
