FINANCIAL RATIOS

The debt-to-equity ratio is a measure of capital structure used to gauge the relative proportion of debt and equity financing used by a company to finance its assets. It compares the company’s total liabilities to its total shareholders‘ equity. The debt-to-equity ratio is expressed as a percentage and is calculated as follows: Debt-to-Equity Ratio = […]

Net interest income (NII) is a measure of financial performance used primarily by banks and other financial institutions. It is the difference between the revenue generated from interest-bearing assets and the cost of borrowing money, calculated as a percentage of the average outstanding balance. Here is the formula for calculating net interest income: Net Interest […]

The cash ratio is a liquidity ratio that measures the company’s ability to generate cash from its current assets to cover its current liabilities. It is calculated by taking the ratio of cash and cash equivalents to current liabilities. The cash ratio is an important measure of liquidity because it measures the company’s ability to […]

The treynor ratio is a measure of the relationship between the beta coefficient and the standard deviation of a security. The ratio is named after the American economist Jack Treynor, who first proposed it in 1961. The treynor ratio is calculated by dividing the security’s beta coefficient by its standard deviation. A high treynor ratio […]

Return on equity (ROE) after tax is a measure of a company’s profitability that is calculated by dividing the company’s net income after taxes by its shareholders’ equity. The formula for return on equity (ROE) after tax is as follows: Return on equity (ROE) after tax = Net income after taxes / Shareholders’ equity Therefore, […]

Sure, the multiples approach is a strategy used in mathematics to find multiples of a number. It involves finding the multiples of a number by multiplying the number by each natural number starting from 1. Here’s an example: Find the multiples of 5. Multiples of 5 are:- 5- 10- 15- 20- 25- 30- 35- 40- […]

Sure, here’s an explanation of the term “beta”: Beta refers to the second letter of the Greek alphabet, represented by the symbol β (beta). It’s also used in various scientific and technical contexts, including: 1. Statistical Beta: In statistics, beta is used to describe the relative variability of a random variable compared to the variability […]

Net Profit Margin The net profit margin is a profitability ratio that measures the percentage of revenue that is left after all expenses have been paid. It is calculated by dividing net profit by net revenue and multiplying by 100%. Formula: Net Profit Margin = (Net Profit / Net Revenue) x 100% Interpretation: A high […]

The profit after tax pat is calculated by subtracting the total tax expense from the gross profit. Formula: Profit after tax PAT = Gross profit – Total tax expense Explanation: Gross profit: The total revenue generated by the company after subtracting cost of goods sold. Total tax expense: The total amount of taxes paid to […]

Earnings per Share (EPS) Earnings per share (EPS) is a company’s net income divided by the number of common shares outstanding. It is a measure of a company’s profitability and is used by investors to assess its financial performance. Formula: Earnings per Share (EPS) = Net Income / Number of Common Shares Outstanding Interpretation: High […]