What is ROA? ROA measures the profitability of a company in relation to its assets. A “good” ROA is typically considered to be anything above 7%. How do you calculate ROA on profit margin? There are a few different ways to calculate ROA on profit margin. One common method is to take the profit margin … Read more
The current ratio is a liquidity ratio that measures a company’s ability to pay short-term and long-term obligations. The current ratio is calculated by dividing a company’s current assets by its current liabilities. A company’s ability to pay its short-term obligations is determined by its current assets, which include cash, accounts receivable, and inventory. A … Read more
EBIAT is a metric used to evaluate a company’s financial performance. It is calculated by taking a company’s earnings before interest and taxes (EBIT) and adding back any interest expense incurred. The resulting figure is a company’s net income before taxes (NIBT). EBIAT is often used to compare a company’s financial performance to that of … Read more
Variance is a statistical measure of how spread out a data set is. It is calculated by taking the difference between each data point and the mean, and then squaring the result. The variance is then the average of these squared differences. Variance is used as a measure of risk in investments, because it indicates … Read more
The gearing ratio is a financial ratio that measures the degree of leverage of a company. It is calculated by dividing the total debt of a company by the sum of the total debt and shareholders’ equity. The gearing ratio is used to assess the financial risk of a company. A higher gearing ratio indicates … Read more
The internal rate of return (IRR) is a measure of investment performance that estimates the annual rate of return for a project or investment, taking into account its costs and income. The internal rate of return is a discount rate that makes the present value of the cash flows from a project or investment equal … Read more
The EBITDA to interest coverage ratio is a financial ratio that measures a company’s ability to pay its interest expenses on its outstanding debt. The ratio is calculated by dividing a company’s earnings before interest, taxes, depreciation, and amortization (EBITDA) by its interest expenses. A company with a high EBITDA to interest coverage ratio is … Read more
The weighted average cost of capital (WACC) is a financial metric that calculates the average cost of a company’s capital, which includes both debt and equity. The WACC is used to discount a company’s future cash flows in order to determine their present value. The WACC formula is: WACC = (E/V) x Re + (D/V) … Read more
The Berry Ratio is a financial ratio that is used to measure the profitability of a company. It is calculated by dividing the company’s net income by its total assets. This ratio is used to assess a company’s ability to generate profits from its assets. What is net cost plus? Net cost plus is a … Read more
Price-to-Book Ratio: Meaning and Formula What is book value of equity? The book value of equity is the portion of a company’s assets that are owned by shareholders. This figure is calculated by subtracting the company’s liabilities from its total assets. The book value of equity can be used to measure the financial health of … Read more
