100+ Stock Investing Metrics: An Extensive Glossary

In this extensive glossary, we'll dive deep into the various stock market metrics that investors use to evaluate and compare companies.

These metrics help investors understand the financial health, valuation, and performance of companies, enabling them to make informed decisions when investing in stocks.

We will define the metrics and provide a formula where relevant.

Financial Performance Metrics

Revenue and Profit Metrics

Revenue

Revenue, also known as sales, is the total amount of money generated by a company through its primary operations. It's the starting point for assessing a company's financial performance.

Formula: Revenue = Total Sales

Cost of Revenue

Cost of Revenue, also known as the cost of goods sold (COGS), represents the direct expenses incurred in producing goods or services. This includes costs like raw materials, labor, and manufacturing overhead.

Formula: Cost of Revenue = Sum of Direct Production Costs

Gross Profit

Gross Profit is calculated by subtracting the Cost of Revenue from Revenue. This metric shows the profitability of a company's core operations, excluding indirect expenses like taxes and interest.

Formula: Gross Profit = Revenue - Cost of Revenue

Gross Profit Margin

Gross Profit Margin is the percentage of Gross Profit relative to Revenue. It indicates how much profit a company generates from each dollar of sales, before considering indirect expenses.

Formula: Gross Profit Margin = (Gross Profit / Revenue) × 100%

Operating Expenses Metrics

R&D Expenses

Research and Development (R&D) Expenses are costs associated with the research, development, and innovation of new products or services. R&D is an essential investment for companies to stay competitive in the market.

Formula: R&D Expenses = Sum of R&D Costs

Selling, General, & Admin Expenses

Selling, General, and Administrative (SG&A) Expenses are indirect costs that include sales and marketing expenses, office expenses, and management salaries. These expenses are necessary for running a business but are not directly tied to producing goods or services.

Formula: SG&A Expenses = Sum of SG&A Costs

Operating Income

Operating Income, also known as operating profit, is the difference between Gross Profit and Operating Expenses (R&D and SG&A). This metric reflects the profitability of a company's core operations, after accounting for all direct and indirect costs.

Formula: Operating Income = Gross Profit - (R&D Expenses + SG&A Expenses)

Operating Income Margin

Operating Income Margin is the percentage of Operating Income relative to Revenue. It shows how efficiently a company manages its operations and generates profit from its core business.

Formula: Operating Income Margin = (Operating Income / Revenue) × 100%

Income and Tax Metrics

Total Other Income/Expenses Net

Total Other Income/Expenses Net refers to non-operating income and expenses not directly related to a company's core operations. This can include gains or losses from investments, interest income, or foreign currency transactions.

Formula: Total Other Income/Expenses Net = Other Income - Other Expenses

Income Before Tax

Income Before Tax is the income remaining after deducting Operating Income and Total Other Income/Expenses Net. This metric represents a company's profitability before considering taxes.

Formula: Income Before Tax = Operating Income + Total Other Income/Expenses Net

Income Before Tax Margin

Income Before Tax Margin is the percentage of Income Before Tax relative to Revenue. It indicates the overall profitability of a company, excluding the impact of taxes.

Formula: Income Before Tax Margin = (Income Before Tax / Revenue) × 100%

Income Tax Expense

Income Tax Expense represents the amount of taxes a company owes based on its taxable income.

Net Income

Net Income is the final profit of a company after deducting Income Tax Expense from Income Before Tax. It represents the actual earnings available to shareholders.

Formula: Net Income = Income Before Tax - Income Tax Expense

Net Income Margin

Net Income Margin is the percentage of Net Income relative to Revenue. It shows how much profit a company generates for each dollar of sales, after accounting for all expenses and taxes.

Formula: Net Income Margin = (Net Income / Revenue) × 100%

Share Metrics

Weighted Avg. Shares Out

Weighted Average Shares Outstanding is the number of shares issued by a company, adjusted for changes like stock splits or issuance of new shares. This metric is used to calculate earnings per share (EPS).

Formula: Weighted Avg. Shares Out = (Shares Outstanding at Beginning of Period + Shares Outstanding at End of Period) / 2

EPS

Earnings Per Share (EPS) is calculated by dividing Net Income by the Weighted Avg. Shares Out. This metric shows the portion of a company's profit allocated to each outstanding share.

Formula: EPS = Net Income / Weighted Avg. Shares Out

Weighted Avg. Shares Out Diluted

Weighted Average Shares Outstanding Diluted is the number of shares adjusted for the potential dilution from stock options, convertible securities, and other instruments that could increase the number of shares.

Formula: Weighted Avg. Shares Out Dil = (Shares Outstanding at Beginning of Period + Shares Outstanding at End of Period + Potential Dilutive Shares) / 2

EPS Diluted

Diluted Earnings Per Share (EPS Diluted) is calculated by dividing Net Income by the Weighted Avg. Shares Out Diluted. This metric shows the portion of a company's profit allocated to each outstanding share, considering potential dilution from stock options and other convertible securities.

Formula: EPS Diluted = Net Income / Weighted Avg. Shares Out Diluted

Interest Metrics

Interest Income

Interest Income is the revenue generated from a company's investments, such as bonds, loans, or other interest-bearing assets.

Formula: Interest Income = Sum of Interest Earned from Investments

Interest Expense

Interest Expense is the cost of borrowing money, usually in the form of loans or bonds. It represents the interest paid on outstanding debt obligations.

Formula: Interest Expense = Sum of Interest Paid on Debt

EBIT and EBITDA Metrics

EBIT

Earnings Before Interest and Taxes (EBIT) is a measure of a company's profitability, excluding the impact of interest expenses and taxes. It is calculated by adding Interest Expense to Operating Income.

Formula: EBIT = Operating Income + Interest Expense

EBIT Margin

EBIT Margin is the percentage of EBIT relative to Revenue. This metric shows how much operating profit a company generates from each dollar of sales, before considering interest expenses and taxes.

Formula: EBIT Margin = (EBIT / Revenue) × 100%

Depreciation & Amortization

Depreciation and Amortization represent the allocation of the cost of tangible and intangible assets over their useful life. Depreciation applies to tangible assets, such as property, plant, and equipment, while amortization applies to intangible assets, such as patents and trademarks.

Formula: Depreciation & Amortization = Sum of Depreciation and Amortization Expenses

EBITDA

Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) is a measure of a company's operating performance. It is calculated by adding Depreciation and Amortization to EBIT. EBITDA is commonly used to compare the financial performance of different companies, as it removes the effects of financing, accounting, and tax policies.

Formula: EBITDA = EBIT + Depreciation & Amortization

EBITDA Margin

EBITDA Margin is the percentage of EBITDA relative to Revenue. It shows how much operating profit a company generates from each dollar of sales, before considering interest expenses, taxes, and depreciation and amortization.

Formula: EBITDA Margin = (EBITDA / Revenue) × 100%

Balance Sheet Metrics

Asset Metrics

Cash & Cash Equivalents

Cash & Cash Equivalents include currency, coins, and highly liquid short-term investments that can be easily converted into cash within three months. This metric represents a company's most liquid assets.

Formula: Cash & Cash Equivalents = Sum of Cash and Short-term Investments

Short Term Investments

Short Term Investments, also known as marketable securities, are investments that can be easily converted into cash within a year, such as stocks and bonds.

Formula: Short Term Investments = Total Current Assets - (Cash + Accounts Receivable + Inventories + Other Current Assets)

Cash & Investments

Cash & Investments is the sum of Cash & Cash Equivalents and Short Term Investments. This metric shows a company's total liquid assets, which can be used to fund operations, pay off debt, or invest in growth opportunities.

Formula: Cash & Investments = Cash & Cash Equivalents + Short Term Investments

Accounts Receivable

Accounts Receivable represents the money owed to a company by its customers for goods or services that have been delivered or used but not yet paid for.

Formula: Accounts Receivable = Sum of Outstanding Invoices

Inventories

Inventories are the raw materials, work-in-progress goods, and finished products that a company holds for sale in the ordinary course of business.

Formula: Inventories = Sum of Raw Materials, Work-in-Progress, and Finished Goods

Other Current Assets

Other Current Assets include assets that are expected to be converted into cash, sold, or consumed within one year, but do not fit into the categories of Cash, Accounts Receivable, or Inventories.

Formula: Other Current Assets = Total Current Assets - (Cash + Accounts Receivable + Inventories)

Total Current Assets

Total Current Assets are the sum of all assets that are expected to be converted into cash, sold, or consumed within one year. This metric shows the liquidity of a company's assets and its ability to meet short-term obligations.

Formula: Total Current Assets = Cash & Cash Equivalents + Short Term Investments + Accounts Receivable + Inventories + Other Current Assets

Property, Plant & Equipment

Property, Plant, and Equipment (PP&E) are tangible assets that have a useful life of more than one year and are used in the production or supply of goods and services, for rental purposes, or for administrative purposes.

Formula: Property, Plant & Equipment = Sum of Land, Buildings, Machinery, Equipment, and Vehicles

Goodwill

Goodwill is an intangible asset that represents the excess value of an acquired company over the fair market value of its identifiable assets and liabilities. Goodwill arises from factors such as a strong brand, customer relationships, or a skilled workforce.

Formula: Goodwill = Purchase Price of Acquired Company - (Fair Market Value of Identifiable Assets - Fair Market Value of Identifiable Liabilities)

Intangible Assets

Intangible Assets are non-physical assets that have a useful life of more than one year, such as patents, trademarks, copyrights, and customer lists.

Formula: Intangible Assets = Sum of Non-Physical Assets with Long-term Value

Goodwill & Intangible Assets

Goodwill & Intangible Assets is the sum of Goodwill and Intangible Assets. This metric represents the value of a company's non-physical assets that contribute to its competitive advantage and long-term growth potential.

Formula: Goodwill & Intangible Assets = Goodwill + Intangible Assets

Long Term Investments

Long Term Investments are investments that a company intends to hold for more than one year, such as stocks, bonds, or real estate. These investments are not intended to be sold or converted into cash in the short term.

Formula: Long Term Investments = Sum of Investments with Holding Period > 1 Year

Other Non-Current Assets

Other Non-Current Assets include assets that are not expected to be converted into cash, sold, or consumed within one year and do not fit into the categories of PP&E, Goodwill, Intangible Assets, or Long Term Investments.

Formula: Other Non-Current Assets = Total Non-Current Assets - (PP&E + Goodwill + Intangible Assets + Long Term Investments)

Total Non-Current Assets

Total Non-Current Assets are the sum of all assets that are not expected to be converted into cash, sold, or consumed within one year. This metric shows the long-term resources a company has available to generate future income.

Formula: Total Non-Current Assets = PP&E + Goodwill + Intangible Assets + Long Term Investments + Other Non-Current Assets

Total Assets

Total Assets is the sum of Total Current Assets and Total Non-Current Assets. It represents the resources a company owns or controls that are expected to provide future benefits.

Formula: Total Assets = Total Current Assets + Total Non-Current Assets

Liability Metrics

Accounts Payable

Accounts Payable represents the money a company owes to its suppliers for goods or services that have been received but not yet paid for.

Formula: Accounts Payable = Sum of Outstanding Invoices Owed to Suppliers

Short Term Debt

Short Term Debt, also known as current debt, is debt that is due to be paid within one year. It includes loans, lines of credit, and the current portion of long-term debt.

Formula: Short Term Debt = Sum of Debt Obligations Due Within 1 Year

Tax Payables

Tax Payables represent the amount of taxes a company owes to various government entities, such as income tax, sales tax, or property tax.

Formula: Tax Payables = Sum of Taxes Owed to Government Entities

Deferred Revenue

Deferred Revenue, also known as unearned revenue, represents the money a company has received for goods or services that have not yet been delivered or performed.

Formula: Deferred Revenue = Sum of Payments Received for Goods or Services Not Yet Delivered or Performed

Other Current Liabilities

Other Current Liabilities include liabilities that are expected to be settled within one year, but do not fit into the categories of Accounts Payable, Short Term Debt, Tax Payables, or Deferred Revenue.

Formula: Other Current Liabilities = Total Current Liabilities - (Accounts Payable + Short Term Debt + Tax Payables + Deferred Revenue)

Total Current Liabilities

Total Current Liabilities are the sum of all liabilities that are expected to be settled within one year. This metric shows a company's short-term obligations and its ability to meet them using its current assets.

Formula: Total Current Liabilities = Accounts Payable + Short Term Debt + Tax Payables + Deferred Revenue + Other Current Liabilities

Long Term Debt

Long Term Debt is debt that is due to be paid in more than one year. It includes loans, bonds, and other long-term obligations.

Formula: Long Term Debt = Sum of Debt Obligations Due in More Than 1 Year

Deferred Tax Liabilities

Deferred Tax Liabilities represent the taxes a company will owe in the future due to temporary differences between the tax treatment and financial reporting of certain items, such as depreciation or revenue recognition.

Formula: Deferred Tax Liabilities = Sum of Future Taxes Owed Due to Temporary Differences

Other Non-Current Liabilities

Other Non-Current Liabilities include liabilities that are not expected to be settled within one year and do not fit into the categories of Long Term Debt or Deferred Tax Liabilities.

Formula: Other Non-Current Liabilities = Total Non-Current Liabilities - (Long Term Debt + Deferred Tax Liabilities)

Total Non-Current Liabilities

Total Non-Current Liabilities are the sum of all liabilities that are not expected to be settled within one year. This metric shows a company's long-term obligations and its ability to meet them using its non-current assets.

Formula: Total Non-Current Liabilities = Long Term Debt + Deferred Tax Liabilities + Other Non-Current Liabilities

Total Liabilities

Total Liabilities is the sum of Total Current Liabilities and Total Non-Current Liabilities. It represents the obligations a company has to its creditors, suppliers, and other parties.

Formula: Total Liabilities = Total Current Liabilities + Total Non-Current Liabilities

Equity Metrics

Common Stock

Common Stock is the equity ownership interest in a company, represented by shares that give stockholders voting rights and a residual claim on corporate earnings and assets.

Formula: Common Stock = Total Stockholders' Equity - (Retained Earnings + Accumulated Other Comprehensive Income)

Retained Earnings

Retained Earnings are the accumulated net income that a company has not distributed as dividends but has reinvested in the business or used to pay off debt.

Formula: Retained Earnings = Beginning Retained Earnings + Net Income - Dividends Paid

Accumulated Other Comprehensive Income

Accumulated Other Comprehensive Income (AOCI) is the cumulative changes in equity from non-owner sources, such as unrealized gains or losses on available-for-sale securities, foreign currency translation adjustments, and pension plan adjustments.

Formula: Accumulated Other Comprehensive Income = Sum of Non-Owner Changes in Equity

Total Stockholders' Equity

Total Stockholders' Equity, also known as shareholders' equity or owner's equity, represents the residual interest in a company's assets after deducting its liabilities. It includes Common Stock, Retained Earnings, and Accumulated Other Comprehensive Income.

Formula: Total Stockholders' Equity = Common Stock + Retained Earnings + Accumulated Other Comprehensive Income

Total Liabilities & Stockholders' Equity

Total Liabilities & Stockholders' Equity is the sum of Total Liabilities and Total Stockholders' Equity. It represents the total sources of funding for a company's assets and should equal Total Assets.

Formula: Total Liabilities & Stockholders' Equity = Total Liabilities + Total Stockholders' Equity

Financial Ratios

Price to Earnings (P/E)

Price to Earnings (P/E) is a valuation ratio calculated by dividing the market price per share by the earnings per share (EPS) over the most recent 12-month period. It indicates how much investors are willing to pay for each dollar of earnings generated by the company.

Formula: P/E Ratio = Market Price per Share / Earnings per Share

Price to Sales (P/S)

Price to Sales (P/S) is a valuation ratio calculated by dividing the market price per share by the revenue per share over the most recent 12-month period. It shows how much investors are willing to pay for each dollar of sales generated by the company

Formula: P/S Ratio = Market Price per Share / Revenue per Share

Price to Operating Cash Flow (P/OCF)

Price to Operating Cash Flow (P/OCF) is a valuation ratio calculated by dividing the market price per share by the operating cash flow per share over the most recent 12-month period. It measures how much investors are willing to pay for each dollar of cash generated from a company's core operations.

Formula: P/OCF Ratio = Market Price per Share / Operating Cash Flow per Share

Price to Free Cash Flow (P/FCF)

Price to Free Cash Flow (P/FCF) is a valuation ratio calculated by dividing the market price per share by the free cash flow per share over the most recent 12-month period. It indicates how much investors are willing to pay for each dollar of free cash flow generated by the company.

Formula: P/FCF Ratio = Market Price per Share / Free Cash Flow per Share

Price to Book (P/B)

Price to Book (P/B) is a valuation ratio calculated by dividing the market price per share by the book value per share. It shows how much investors are willing to pay for each dollar of a company's net assets.

Formula: P/B Ratio = Market Price per Share / Book Value per Share

Enterprise Value to Sales (EV/Sales)

Enterprise Value to Sales (EV/Sales) is a valuation ratio calculated by dividing the enterprise value by the total revenue for the most recent 12-month period. It measures the value of a company relative to its sales, taking into account both equity and debt financing.

Formula: EV/Sales Ratio = Enterprise Value / Total Revenue

Enterprise Value to EBITDA (EV/EBITDA)

Enterprise Value to EBITDA (EV/EBITDA) is a valuation ratio calculated by dividing the enterprise value by the EBITDA for the most recent 12-month period. It compares the value of a company, including its debt and equity, to its earnings before interest, taxes, depreciation, and amortization.

Formula: EV/EBITDA Ratio = Enterprise Value / EBITDA

Enterprise Value to Operating Cash Flow (EV/OCF)

Enterprise Value to Operating Cash Flow (EV/OCF) is a valuation ratio calculated by dividing the enterprise value by the operating cash flow for the most recent 12-month period. It measures a company's value relative to the cash generated from its core operations, taking into account both debt and equity financing.

Formula: EV/OCF Ratio = Enterprise Value / Operating Cash Flow

Enterprise Value to Free Cash Flow (EV/FCF)

Enterprise Value to Free Cash Flow (EV/FCF) is a valuation ratio calculated by dividing the enterprise value by the free cash flow for the most recent 12-month period. It compares the value of a company, including its debt and equity, to its free cash flow.

Formula: EV/FCF Ratio = Enterprise Value / Free Cash Flow

Earnings Yield

Earnings Yield is the inverse of the Price to Earnings (P/E) ratio, calculated by dividing the earnings per share (EPS) by the market price per share. It shows the percentage of a company's earnings relative to its stock price.

Formula: Earnings Yield = Earnings per Share / Market Price per Share

Free Cash Flow Yield

Free Cash Flow Yield is the inverse of the Price to Free Cash Flow (P/FCF) ratio, calculated by dividing the free cash flow per share by the market price per share. It shows the percentage of a company's free cash flow relative to its stock price.

Formula: Free Cash Flow Yield = Free Cash Flow per Share / Market Price per Share

Market Capitalization (Market Cap)

Market Capitalization, or Market Cap, is the total value of a company's outstanding shares of stock. It is calculated by multiplying the market price per share by the number of outstanding shares.

Formula: Market Cap = Market Price per Share × Outstanding Shares

Current Ratio

The Current Ratio is a liquidity ratio that measures a company's ability to pay its short-term obligations using its short-term assets. It is calculated by dividing the total current assets by the total current liabilities.

Formula: Current Ratio = Total Current Assets / Total Current Liabilities

Quick Ratio

The Quick Ratio, also known as the Acid-Test Ratio, is a liquidity ratio that measures a company's ability to pay its short-term obligations using its most liquid assets. It is calculated by dividing the total current assets minus inventories by the total current liabilities.

Formula: Quick Ratio = (Total Current Assets - Inventories) / Total Current Liabilities

Cash Ratio

The Cash Ratio is a liquidity ratio that measures a company's ability to pay its short-term obligations using only its cash and cash equivalents. It is calculated by dividing the total cash and cash equivalents by the total current liabilities.

Formula: Cash Ratio = Cash & Cash Equivalents / Total Current Liabilities

Return on Equity (ROE)

Return on Equity (ROE) is a profitability ratio that measures the rate of return on a company's shareholders' equity. It is calculated by dividing the net income by the average shareholders' equity during the period.

Formula: ROE = Net Income / Average Shareholders' Equity

Return on Invested Capital (ROIC)

Return on Invested Capital (ROIC) is a profitability ratio that measures the rate of return on the capital invested in a company. It is calculated by dividing the net operating profit after taxes (NOPAT) by the total invested capital.

Formula: ROIC = Net Operating Profit After Taxes / Total Invested Capital

Return on Assets (ROA)

Return on Assets (ROA) is a profitability ratio that measures the rate of return on a company's total assets. It is calculated by dividing the net income by the average total assets during the period.

Formula: ROA = Net Income / Average Total Assets

Cash Conversion Cycle (CCC)

The Cash Conversion Cycle (CCC) is a measure of the time it takes for a company to convert its investments in inventory and other resources into cash from sales. It is calculated as the sum of Days of Sales Outstanding (DSO), Days of Inventory Outstanding (DIO), and Days of Payables Outstanding (DPO).

Formula: CCC = DSO + DIO - DPO

Days of Sales Outstanding (DSO)

Days of Sales Outstanding (DSO) is a measure of the average number of days it takes for a company to collect payment from its customers after a sale has been made. It is calculated by dividing the accounts receivable by the average daily sales.

Formula: DSO = (Accounts Receivable / Total Revenue) × 365

Days of Inventory Outstanding (DIO)

Days of Inventory Outstanding (DIO) is a measure of the average number of days it takes for a company to sell its inventory. It is calculated by dividing the inventory by the average daily cost of goods sold (COGS).

Formula: DIO = (Inventories / COGS) × 365

Operating Cycle

The Operating Cycle is the sum of Days of Sales Outstanding (DSO) and Days of Inventory Outstanding (DIO). It represents the time it takes for a company to convert its inventory into cash through sales and accounts receivable collections.

Formula: Operating Cycle = DSO + DIO

Days of Payables Outstanding (DPO)

Days of Payables Outstanding (DPO) is a measure of the average number of days it takes for a company to pay its suppliers. It is calculated by dividing the accounts payable by the average daily cost of goods sold (COGS).

Formula: DPO = (Accounts Payable / COGS) × 365

Operating Profit Margin

Operating Profit Margin is a profitability ratio that measures the percentage of a company's revenue remaining after accounting for all operating expenses. It is calculated by dividing the operating income by the total revenue.

Formula: Operating Profit Margin = Operating Income / Total Revenue

Pretax Profit Margin

Pretax Profit Margin is a profitability ratio that measures the percentage of a company's revenue remaining before accounting for income taxes. It is calculated by dividing the income before tax by the total revenue.

Formula: Pretax Profit Margin = Income Before Tax / Total Revenue

Net Profit Margin

Net Profit Margin is a profitability ratio that measures the percentage of a company's revenue remaining after accounting for all expenses, including taxes. It is calculated by dividing the net income by the total revenue.

Formula: Net Profit Margin = Net Income / Total Revenue

EBIT Profit Margin

EBIT Profit Margin is a profitability ratio that measures the percentage of a company's revenue remaining after accounting for all operating expenses, excluding interest and taxes. It is calculated by dividing the EBIT (Earnings Before Interest and Taxes) by the total revenue.

Formula: EBIT Profit Margin = EBIT / Total Revenue

Effective Tax Rate

The Effective Tax Rate is a measure of the average rate at which a company's pre-tax profits are taxed. It is calculated by dividing the income tax expense by the income before tax.

Formula: Effective Tax Rate = Income Tax Expense / Income Before Tax

Debt Ratio

The Debt Ratio is a solvency ratio that measures the proportion of a company's total assets that are financed by debt. It is calculated by dividing the total liabilities by the total assets.

Formula: Debt Ratio = Total Liabilities / Total Assets

Debt to Equity Ratio (D/E)

The Debt to Equity Ratio (D/E) is a solvency ratio that measures the proportion of a company's total liabilities relative to its shareholders' equity. It is calculated by dividing the total liabilities by the total shareholders' equity.

Formula: Debt to Equity Ratio = Total Liabilities / Total Shareholders' Equity

Long Term Debt to Capitalization

The Long Term Debt to Capitalization ratio is a solvency ratio that measures the proportion of a company's long-term debt relative to its total capitalization (the sum of long-term debt and shareholders' equity). It is calculated by dividing the long-term debt by the sum of long-term debt and shareholders' equity.

Formula: Long Term Debt to Capitalization = Long Term Debt / (Long Term Debt + Shareholders' Equity)

Total Debt to Capitalization

The Total Debt to Capitalization ratio is a solvency ratio that measures the proportion of a company's total debt (both short-term and long-term) relative to its total capitalization (the sum of debt and shareholders' equity). It is calculated by dividing the total debt by the sum of total debt and shareholders' equity.

Formula: Total Debt to Capitalization = Total Debt / (Total Debt + Shareholders' Equity)

Interest Coverage

The Interest Coverage ratio is a solvency ratio that measures a company's ability to meet its interest payments on outstanding debt. It is calculated by dividing the EBIT (Earnings Before Interest and Taxes) by the interest expense.

Formula: Interest Coverage = EBIT / Interest Expense

Cash Flow to Debt Ratio

The Cash Flow to Debt Ratio is a solvency ratio that measures a company's ability to repay its debt using its operating cash flow. It is calculated by dividing the net cash provided by operating activities by the total debt.

Formula: Cash Flow to Debt Ratio = Net Cash Provided by Operating Activities / Total Debt

Assets to Equity Ratio

The Assets to Equity Ratio is a solvency ratio that measures the proportion of a company's total assets that are financed by shareholders' equity. It is calculated by dividing the total assets by the total shareholders' equity.

Formula: Assets to Equity Ratio = Total Assets / Total Shareholders' Equity

Receivables Turnover

Receivables Turnover is an efficiency ratio that measures the number of times a company collects its average accounts receivable during a period. It is calculated by dividing the total revenue by the average accounts receivable.

Formula: Receivables Turnover = Total Revenue / Average Accounts Receivable

Payables Turnover

Payables Turnover is an efficiency ratio that measures the number of times a company pays its average accounts payable during a period. It is calculated by dividing the cost of goods sold (COGS) by the average accounts payable.

Formula: Payables Turnover = COGS / Average Accounts Payable

Inventory Turnover

Inventory Turnover is an efficiency ratio that measures the number of times a company sells and replaces its inventory during a period. It is calculated by dividing the cost of goods sold (COGS) by the average inventory.

Formula: Inventory Turnover = COGS / Average Inventory

Fixed Asset Turnover

Fixed Asset Turnover is an efficiency ratio that measures how effectively a company uses its fixed assets to generate sales. It is calculated by dividing the total revenue by the average net fixed assets.

Formula: Fixed Asset Turnover = Total Revenue / Average Net Fixed Assets

Asset Turnover

Asset Turnover is an efficiency ratio that measures how effectively a company uses its total assets to generate sales. It is calculated by dividing the total revenue by the average total assets.

Formula: Asset Turnover = Total Revenue / Average Total Assets

Payout Ratio

The Payout Ratio is a financial metric that measures the proportion of earnings a company distributes to its shareholders in the form of dividends. It is calculated by dividing the dividends per share by the earnings per share (EPS).

Formula: Payout Ratio = Dividends per Share / Earnings per Share

Operating Cash Flow (OCF) to Sales Ratio

The Operating Cash Flow (OCF) to Sales Ratio is a cash flow ratio that measures the proportion of a company's sales that is generated as operating cash flow. It is calculated by dividing the net cash provided by operating activities by the total revenue.

Formula: OCF to Sales Ratio = Net Cash Provided by Operating Activities / Total Revenue

Free Cash Flow (FCF) to Operating Cash Flow (OCF) Ratio

The Free Cash Flow (FCF) to Operating Cash Flow (OCF) Ratio is a cash flow ratio that measures the proportion of a company's operating cash flow that is available as free cash flow. It is calculated by dividing the free cash flow by the net cash provided by operating activities.

Formula: FCF to OCF Ratio = Free Cash Flow / Net Cash Provided by Operating Activities

Dividend Yield

The Dividend Yield is a financial metric that measures the annual dividend income an investor can expect to receive relative to the market price of the stock. It is calculated by dividing the annual dividends per share by the market price per share.

Formula: Dividend Yield = Annual Dividends per Share / Market Price per Share

Working Capital

Working Capital is a measure of a company's short-term financial health and operational efficiency. It is calculated as the difference between a company's current assets and current liabilities.

Formula: Working Capital = Current Assets - Current Liabilities

Deferred Income Tax

Deferred Income Tax is a liability that results from the temporary differences between the tax basis of assets and liabilities and their reported amounts in financial statements. It represents the amount of income tax payable or recoverable in future periods.

Formula: Deferred Income Tax = (Temporary Differences × Tax Rate)

Stock-based Compensation

Stock-based Compensation is a method of compensating employees or service providers by granting them equity ownership or options to buy shares in the company. This type of compensation is often used to align the interests of employees with those of the shareholders.

Formula: Stock-based Compensation Expense = (Fair Value of Equity Award × Number of Awards Granted) / Vesting Period

KPIs

Key Performance Indicators (KPIs) are a set of quantifiable measures that a company uses to track its progress towards achieving its strategic objectives. KPIs vary by industry and company, and there is no single formula to calculate them.

Churn

Churn refers to the rate at which customers stop doing business with a company, usually expressed as a percentage. High churn rates indicate customer dissatisfaction or strong competition.

Formula: Churn Rate = (Number of Customers Lost During Period / Number of Customers at the Start of Period) × 100

CLTV

Customer Lifetime Value (CLTV) is a prediction of the net profit a company expects to generate from a customer throughout the entire business relationship. It helps businesses determine how much they should invest in customer acquisition and retention.

Formula: CLTV = (Average Revenue per Customer × Gross Margin per Customer) / Churn Rate

ARPU

Average Revenue Per User (ARPU) is a measure used by companies to assess the revenue generated per user or customer. It is commonly used in the telecommunications and subscription-based industries.

Formula: ARPU = Total Revenue / Total Number of Users or Customers

DAUs

Daily Active Users (DAUs) is a metric that reflects the number of unique users who engage with a digital platform or service on a daily basis. It is commonly used in the tech industry to measure the success of apps and online platforms.

Formula: DAUs = Total Unique Users Engaged Daily

MAUs

Monthly Active Users (MAUs) is a metric that represents the number of unique users who engage with a digital platform or service within a given month. It helps companies understand the level of user engagement and the success of their product or service.

Formula: MAUs = Total Unique Users Engaged Monthly

ARR

Annual Recurring Revenue (ARR) is a measure of the predictable and recurring revenue components of a subscription-based business, typically calculated on an annual basis. It does not include one-time or variable fees.

Formula: ARR = (Monthly Recurring Revenue × 12) or (Number of Subscriptions × Annual Subscription Price)

MRR

Monthly Recurring Revenue (MRR) is a metric used by subscription-based businesses to measure the predictable and recurring revenue generated from their customers on a monthly basis.

Formula: MRR = Sum of Monthly Recurring Revenue from All Customers

Bookings

Bookings represent the value of contracts or agreements signed by customers to purchase goods or services from a company. This metric measures the total value of these agreements before they are recognized as revenue.

Formula: Bookings = Total Value of Contracts or Agreements Signed

Trial to Paid

Trial to Paid is a metric that measures the conversion rate of customers who move from a free trial or freemium version of a product or service to a paid subscription. It is an important metric for subscription-based businesses, as it indicates the effectiveness of their sales and marketing efforts in converting potential customers into paying customers.

Formula: Trial to Paid Conversion Rate = (Number of Customers Who Converted to Paid Subscriptions / Total Number of Trial Users) × 100

Understanding various stock market metrics is essential for investors to make informed decisions about their investments. By using these metrics, investors can assess the financial health, profitability, efficiency, and valuation of a company. This comprehensive guide on stock market metrics provides definitions and formulas for each metric, enabling investors to analyze a company's performance and make data-driven investment decisions.

FAQs

1. What is the difference between EBIT and EBITDA?
   EBIT (Earnings Before Interest and Taxes) is a measure of a company's operating performance, excluding interest and taxes. EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) is an extension of EBIT that also excludes depreciation and amortization expenses. Both metrics are used to assess a company's profitability and operating performance.

2. How do I calculate the Price to Earnings (P/E) ratio?
   The Price to Earnings (P/E) ratio is a valuation ratio calculated by dividing the market price per share by the earnings per share (EPS). It is used to evaluate if a stock is overvalued or undervalued compared to its earnings.

3. What is the difference between Current Ratio, Quick Ratio, and Cash Ratio?
   All three ratios are liquidity ratios used to measure a company's ability to meet its short-term obligations. The Current Ratio is calculated by dividing the total current assets by the total current liabilities. The Quick Ratio, also known as the Acid-Test Ratio, is a more stringent measure of liquidity that excludes inventory from current assets before dividing by current liabilities. The Cash Ratio is the most conservative liquidity ratio, only considering cash and cash equivalents when dividing by current liabilities.

4. What is the significance of Return on Equity (ROE) in stock market metrics?
   Return on Equity (ROE) is a profitability ratio that measures the amount of net income generated for each dollar of shareholders' equity. It is an essential metric for investors as it shows how effectively a company is using its equity to generate profits.

5. What is the Free Cash Flow (FCF) and why is it important?
   Free Cash Flow (FCF) is the cash generated by a company's operations that is available for distribution to the company's investors (shareholders and debtholders). It is calculated by subtracting capital expenditures from operating cash flow. FCF is an important metric because it shows the company's financial flexibility and ability to invest in growth opportunities, pay down debt, or return value to shareholders through dividends or share buybacks.

6. How do you calculate Return on Invested Capital (ROIC)?
   Return on Invested Capital (ROIC) is a profitability ratio that measures the return a company generates on its invested capital (the sum of debt and equity capital). To calculate ROIC, divide the company's net operating profit after tax (NOPAT) by the invested capital. NOPAT is calculated by multiplying operating income by (1 - tax rate).
   Formula: ROIC = NOPAT / Invested Capital

7. What is the difference between Gross Profit Margin and Net Profit Margin?
   Gross Profit Margin is a profitability ratio that measures the proportion of revenue remaining after deducting the cost of goods sold (COGS). It is calculated by dividing gross profit by total revenue. Net Profit Margin, on the other hand, measures the proportion of revenue remaining after accounting for all expenses, including taxes and interest. It is calculated by dividing net income by total revenue.

8. What is the significance of the Debt to Equity Ratio in stock market metrics?
   The Debt to Equity Ratio is a solvency ratio that measures the proportion of a company's total debt relative to its shareholders' equity. A high Debt to Equity Ratio indicates that a company is highly leveraged and may have a higher risk of defaulting on its debt obligations. Investors use this ratio to assess a company's financial risk and stability.

9. What is the importance of the Inventory Turnover Ratio in stock market metrics?
   The Inventory Turnover Ratio is an efficiency ratio that measures how effectively a company manages its inventory. A high Inventory Turnover Ratio indicates that a company sells and replaces its inventory quickly, which is generally a sign of efficient inventory management. Low Inventory Turnover may suggest overstocking, slow-moving inventory, or inefficient sales processes.

10. How do valuation ratios like Price to Earnings (P/E) and Price to Sales (P/S) help investors in making investment decisions?
    Valuation ratios like Price to Earnings (P/E) and Price to Sales (P/S) help investors determine the relative value of a stock compared to its earnings or sales, respectively. These ratios are useful for comparing the valuations of different companies within the same industry or comparing a company's valuation to the industry average. By analyzing these ratios, investors can identify potentially overvalued or undervalued stocks and make informed investment decisions.