Famous Quotes
“You miss 100% of the shots you don’t take.”
Wayne Gretzky
The average rate at which a company's pre-tax profits are taxed.
(Effective) Tax Rate
A picture or snapshot of the financial condition of an organization at a specific point in time.
Balance Sheet
An estimate of the value of a company according to the stock market.
Market Value
net income
%
sales (AKA revenue)
Net (Profit) Margin
“Call it a curse, or just call me blessed, if you can’t handle my worst, you ain’t getting my best”
Nicki Minaj
Measures how often a company sells and replaces its goods over a specific period of time.
Inventory Turnover Ratio
______ ______ accounts for income when it is earned and expenses when they are incurred, rather than when the money is exchanged.
Accrual Accounting
Provides information about the organization's ability to meet its current liabilities with current assets; excludes inventory.
Quick/Acid-Test Ratio
%
earnings per share
Price-to-Earnings (PE) Ratio
“Success isn’t permanent and failure isn’t fatal.”
Mike Ditka
This ratio measures the organization's ability to pay the interest on its debt owed.
Interest Coverage Ratio
A 12-month period over which a company budgets its money; may or may not begin in January.
Fiscal Year.
Everyone's favorite measure of the effectiveness and efficiency of the organization's operations. Higher is better.
Net Profit Margin.
price per share of common stock
*
number of shares outstanding
Market Value
"I don't think limits."
Usain Bolt
The most commonly used liquidity measure; used to measure the organization's ability to meet its current (those due within a year) liabilities.
Current Ratio
Refers to how a company chooses to finance its operation with debt versus equity.
Leverage
This ratio is the comparison of financial borrowings and earnings before interest, taxes, depreciation and amortization. It is a very commonly used metric for estimating the business valuations.
Debt-to-EBITDA
EBIT
%
Interest Expense
Interest Coverage Ratio
"Concentration and toughness are the margins of victory."
Bill Russell
A simple yet telling measure of an organization's leverage. The more leveraged a company is, the higher this ratio is, implying greater financial risk.
Debt Ratio
The net value of a firm's assets found on its balance sheet; roughly equal to the total amount all shareholders would get if they liquidated the company
Book Value
This ratio measures how much profit a company makes on a dollar of sales after paying for variable costs of production, such as wages and raw materials, but before paying interest or tax.
Operating Margin
(net income + after tax interest expense)
%
average total assets
Return on Assets (ROA)