
Operating profit is the profit generated from the core business of a company before accounting for interest and taxes.

Inventory turnover is an important metric for evaluating how efficiently a firm turns its inventory into sales.

For a couple of key reasons, average inventory can be a better and more accurate measure when calculating the inventory turnover ratio.

The formula for calculating working capital is straightforward, but lends great insight into the shorterterm health of a firm.

Working capital represents the difference between a firm's current assets and current liabilities.

The concept of CAGR is relatively straightforward and requires only three primary inputs: an investments beginning value, ending value, and the time period.

Return on equity (ROE) is a ratio that provides investors insight into how efficiently a company (or more specifically, its management team) is managing the equity that shareholders have contributed to the company.

The compound annual growth rate (CAGR) measures the return on an investment over a certain period of time. Below is an overview of some of its limitations.

Return on equity (ROE) and return on assets (ROA) are two of the most important measures for evaluating how effectively a company's management team is managing the capital that shareholders entrust to it.

The compound annual growth rate (CAGR), measures the return on an investment over a certain period of time. The internal rate of return, or IRR, also measures investment performance but is more flexible than CAGR.

Any metric that uses net income is basically nullified as an input when a company reports negative profits. Return on equity (ROE) is one such metric. However, not all companies with negative ROEs are always bad investments.

The inventory turnover ratio is a key measure for evaluating how efficient management is at managing company inventory and generating sales from it.

Return on investment (ROI) is a useful valuation tool, but it lacks meaning for longterm investments.

Find out how investors and companies are calculating the social return on investment (SROI), which evaluates both the financial and social impact.

Find out how to calculate this common valuation ratio and what the results can tell you about a company's performance.

A low P/E ratio doesn't automatically mean a stock is undervalued, just like a high P/E ratio doesn't necessarily mean it is overvalued.

Check out an example of how the return on investment (ROI) for similar investments can vary greatly, depending on how the value is calculated.

Find out why using the debttoequity ratio for reviewing companies doesn't always make for an applestoapples comparison.

Learn why earnings per share (EPS) is often considered to be one of the most important variables in determining a stock’s value.

Find out how to calculate the current ratio and what that result can tell you about a potential investment.

The interest rate is one of many external factors that can change the inputs in the weighted average cost of capital (WACC) calculation.

Operating a daytrading account is like owning thoroughbreds or an America’s Cup team. You can't just enter the arena with no money.

Learn how to make sense of the debttoequity numbers of a company when looking for good investment opportunities.

The earnings per share (EPS) indicator has three basic types that can alert you to past, present and future health of a company.

Statistics can be misleading, and numbers on the balance sheet are no exception. Find out how the current ratio can confuse your investment analysis.

Find out how to use this fundamental financial ratio to help assess a company's performance.

Both weighted average cost of capital (WACC) and internal rate of return (IRR) are great measures for assessing value, but there are fundamental difference you need to know.

Find out how the quick ratio and the current ratio can offer different views on a company's ability to pay off liabilities.

"The bottom line" is a cliche is many aspects, but in finance the expression usually refers to a specific financial calculation: earnings per share (EPS).

Cost of debt is the rate, expressed as a percentage, that a company pays on its borrowings.

The Solvency Ratio is one of many ratios used to measure a company's ability to pay its debts. Generally, the higher the ratio the better.

Earnings before interest and taxes, or EBIT, takes a company’s revenue, or earnings, and subtracts its cost of goods sold and operating expenses.

Don't let the name fool you. Even a "fundamental" investor has to pay attention to certain metrics.

The raging debate on high frequency trading may lead the average retail investor to think that he/she continues to get a raw deal in the stock market. The reality is that these are probably the best of times for them.

The compound annual growth rate, or CAGR for short, represents one of the most accurate ways to calculate and determine returns for individual assets, investment portfolios and anything that can rise or fall in value over time.

A sinking fund is a way for companies to pay off part of their bond issue before it reaches maturity. By eliminating its debt gradually, the bond issuer is more likely to attract investors concerned about default risk.

In retail, successfully managing return on investment (ROI) and other financial indicators is the key to a healthy business.

You can learn a lot about any listed company through this system  if you know how to use it.

The DebtService Coverage Ratio (DSCR) is a simple way to analyze whether a company can adequately manage its borrowing costs. The ratio helps banks evaluate the credit worthiness of an organization that is applying for a loan. It also tips off investors to companies carrying a debt level that could ...

Contribution margin is a cost accounting concept that allows a company to determine the profitability of individual products.

Operating leverage tells investors about the relationship between a company's fixed and variable costs. The higher a company's fixed costs in relation to its variable costs, the greater its operating leverage, and vice versa.

Inventory turnover is a ratio that shows how quickly a company uses up its supply of goods over a given time frame. Inventory turnover may be calculated as the market value of sales divided by ending inventory, or as cost of goods sold (COGS) divided by average inventory.

Return on Invested Capital, or ROIC, is a fundamental method of determining a company's financial performance. It is used to measure how well a company is investing its capital. ROIC is calculated as: (Net Income  Dividends) / Invested Capital

Get a deeper understanding of ROE with these threestep and fivestep calculations.

Find out if management is doing its job of creating profit for investors.

Find out how a simple calculation can help you uncover the most efficient companies.

The dividend payout ratio and retention ratio measure how much profit a company gives back to shareholders as dividends. When a business earns money, it must decide whether to use all of its earnings for future operations or to pass some of it along to stockholders through a quarterly dividend check.

For some investors, the possibility of stumbling upon a small biotech with a potential blockbuster drug, or a junior miner with a giant mineral discovery, makes the risk of investing in companies with negative earnings well worth taking.

Are the markets random or cyclical? It depends on who you ask. Here, we go over both sides of the argument.

The financing activity in the cash flow statement measures the flow of cash between a firm and its owners and creditors.