Search results
Operating Leverage
An operating leverage is a company’s EBIT (earnings before taxes and financial operations) sensitivity to changes of sales. As the sensitivity is measured to Operating income (close to EBIT), the
http://www.investingforbeginners.eu/operating_leverage
OIBDA
OIBDA or also called Operating income before depreciation and amortization is a financial measure used to represent specific type of an income. There are many types of income and each of those has some advantages
http://www.investingforbeginners.eu/oibda
Financial Statements
Financial statements are periodically by the companies issued reports that provide the most important financial information about company’s financial condition and success of activity. There
http://www.investingforbeginners.eu/financial_statements
Income Statement
Income statement (also called statement of operations, profit and loss statement, P&L or other) is one of three main financial statements reported by the companies periodically. Income statement exposes compa
http://www.investingforbeginners.eu/income_statement
Income
The term income may have several meanings. In corporate finance it basically means profit or earnings that are equal to revenue less expenses. But in some cases income may also indicate company’s revenue bu
http://www.investingforbeginners.eu/income
Net Income
Net income (net profit) is a financial indicator of the company that shows the real profitability of the business in accordance to its capital structure. Net income is equal to all revenue and gains less all expe
http://www.investingforbeginners.eu/net_income
Gross Income
Gross income (gross profit) is equal to company’s revenue minus all cost of goods sold (COGS). Gross income is just one type of income; other types of income are Operating income, pre-tax income or net inco
http://www.investingforbeginners.eu/gross_income
Operating income
Operating income (operating profit) is the type of company’s profit that comes from operating activity. That means operating profit is lower than gross income by operating expenses but higher than pre-tax p
http://www.investingforbeginners.eu/operating_income
Operating Margin
Operating margin is a profitability percentage that shows what company’s profit margin is before it pays interests and taxes. Operating margin simply ignores capital structure (because ignores financial act
http://www.investingforbeginners.eu/operating_margin
EBIT
EBIT (also called Earnings Before Interest and Taxes) is a financial indicator of the company that provides information about company’s profitability while ignoring the impact of capital structure and corpo
http://www.investingforbeginners.eu/ebit
Times Interest Earned Ratio
‘Times interest earned ratio' compares ‘earnings before interest and taxes’ of the company to its interest expenses. Low ratio means that company may be in dangerous situation and its interest e
http://www.investingforbeginners.eu/times_interest_earned_ratio
Financial Forecasting
Financial forecasting is a part of financial planning and also a part of a DCF valuation. But usually financial planning covers only a period of year or two while financial forecasting regularly covers about five
http://www.investingforbeginners.eu/financial_forecasting
Asset Turnover Ratio Formula
There are many modifications of ‘asset turnover ratio’ formulas. These are the most popular forms of this ratio formula: (1) Asset turnover ratio = Sales revenue / Total averag
http://www.investingforbeginners.eu/asset_turnover_ratio_formula
Strategic Financial Planning
Strategic financial planning is a bit different from standard financial planning because standard financial planning focuses on a budget which is detailed estimation of financial statements when strategic financi
http://www.investingforbeginners.eu/strategic_financial_planning
Operating Cash Flow
Operating cash flow or ‘cash flow from operations’ (CFFO) is one of the most important among financial indicators and is used to measure company’s results in cash terms. While net income or oper
http://www.investingforbeginners.eu/operating_cash_flow
Return on Invested Capital
Return on invested capital (ROIC) or also called return on capital is a financial ratio employed to measure nominal company’s return that is earned by capital invested in operating asset. Basically return o
http://www.investingforbeginners.eu/return_on_invested_capital
Coverage Ratios
Coverage ratios are financial ratios that measure the ability of the company to repay its financial liabilities. Such ratios compare company’s Operating income (or other type of income) or operating cash fl
http://www.investingforbeginners.eu/coverage_ratios
Return on Capital Employed
Return on capital employed ratio (ROCE) measures company’s return compared to its employed capital. Return in this case is some kind of profit (mostly EBIT or NOPAT) and the capital employed means equity ca
http://www.investingforbeginners.eu/return_on_capital_employed
Cost/Income Ratio
Cost/income ratio is very popular financial ratio in bank analysis. This ratio measures the relation of bank’s operating costs to Operating income. Basically, lower ratio is better because means higher prof
http://www.investingforbeginners.eu/cost_income_ratio