Expense Ratio.

An expense ratio is a measure of how much a company spends on operating expenses in relation to its overall revenue. This ratio is used to assess how efficiently a company is run and can be used to compare companies within the same industry. A lower expense ratio indicates a more efficient company. What does … Read more

Coverage Ratio.

A coverage ratio is a financial ratio that is used to determine how well a company is able to meet its financial obligations. The most common coverage ratio is the debt-to-equity ratio, which is used to assess a company’s ability to pay its debts. Other coverage ratios include the interest coverage ratio and the fixed-charge … Read more

Altman Z-Score: What It Is, Formula, How to Interpret Results.

Altman Z-Score: Formula, Interpretation How high can an Altman Z-score be? The Altman Z-score is a financial ratio that is used to predict the probability of bankruptcy for a publicly traded company. The Altman Z-score is calculated using a formula that takes into account five different financial ratios: 1. Working capital / total assets 2. … Read more

The Dupont Formula: How To Calculate and Use It.

How to Use the Dupont Analysis Formula What does the DuPont identity tell you? The DuPont identity is a formula used to decompose a company’s return on equity (ROE) into three different ratios: ROE = Net Profit Margin * Asset Turnover * Equity Multiplier Net Profit Margin The net profit margin is a measure of … Read more

Cash Flow After Taxes (CFAT).

CFAT stands for Cash Flow After Taxes. This is a measure of a company’s cash flow that takes into account the effect of taxes. It is calculated by subtracting taxes from a company’s operating cash flow. This metric is useful for evaluating a company’s ability to generate cash flow after paying taxes. Why it is … Read more

Standard Deviation Formula and Uses vs.

Variance. Standard Deviation Formula: The standard deviation is a measure of how spread out data is. It is calculated by taking the square root of the variance. The standard deviation can be used to calculate the probability that a given data point will fall within a certain range of values. Variance: The variance is a … Read more

Net Debt-to-EBITDA Ratio: Definition, Formula, and Example.

What is the Net Debt-to-EBITDA Ratio? The net debt-to-EBITDA ratio is a financial measure used to assess a company’s leverage. This ratio is calculated by dividing a company’s net debt by its earnings before interest, taxes, depreciation, and amortization (EBITDA). A higher net debt-to-EBITDA ratio indicates a company has more debt and is less able … Read more

How to Calculate Payout Ratios.

Payout Ratio: What It Is, How To Calculate It, and How To Use It How is monthly dividend payout calculated? To calculate a monthly dividend payout, you would first need to determine the amount of the dividend per share. This can be found by looking at the company’s financial statements. Once you have the dividend … Read more

Herfindahl-Hirschman Index (HHI).

The Herfindahl-Hirschman Index (HHI) is a measure of market concentration. It is calculated by summing the squares of the market share of each firm in the market. The HHI ranges from 0 to 1, with 0 indicating perfect competition and 1 indicating a monopoly. The HHI can be used to assess whether a market is … Read more

Funds From Operations (FFO).

Funds from operations (FFO) is a measure of a company’s ability to generate cash flow from its core operations. It is often used as a metric to assess the financial performance of real estate investment trusts (REITs). FFO is calculated by adding back certain non-cash items to net income, such as depreciation and amortization. This … Read more