Finance KPIs
- Price to Earnings Ratio (P/E Ratio)
Formula: Market Price per Share / Earnings per Share (EPS)
Description: Indicates how much investors are willing to pay per dollar of earnings, often used to value a company's stock.
- Free Cash Flow (FCF)
Formula: Operating Cash Flow - Capital Expenditures
Description: Measures the cash available after a company has met its capital expenditures, highlighting its financial flexibility.
- Weighted Average Cost of Capital (WACC)
Formula: (E/V × Re) + ((D/V × Rd) × (1 - Tax Rate))
Description: Represents the company's average cost of financing (debt and equity), providing insight into the minimum return required by investors.
- Debt to Equity Ratio
Formula: Total Debt / Total Equity
Description: Measures a company's financial leverage, showing the proportion of debt relative to shareholder equity.
- Current Ratio
Formula: Current Assets / Current Liabilities
Description: Assesses a company’s ability to cover short-term obligations with short-term assets.
- Quick Ratio (Acid-Test Ratio)
Formula: (Current Assets - Inventory) / Current Liabilities
Description: Similar to the current ratio but excludes inventory, providing a stricter measure of liquidity.
- Return on Equity (ROE)
Formula: Net Income / Average Shareholders' Equity
Description: Evaluates the profitability of a company relative to shareholder investments.
- Dividend Payout Ratio
Formula: Dividends / Net Income
Description: Shows the proportion of net income distributed as dividends, indicating shareholder returns.
- Return on Assets (ROA)
Formula: Net Income / Average Total Assets
Description: Reflects the efficiency of asset utilization in generating net income.
- Return on Invested Capital (ROIC)
Formula: EBIT (1 - Tax) / (Long-Term Debt + Equity - Cash)
Description: Measures the efficiency of a company’s capital use in generating profits.
- Economic Value Added (EVA)
Formula: EBIT (1 - Tax) - ((Long-Term Debt + Equity) × WACC)
Description: Shows the financial value generated over the required return on capital.
- Earnings Per Share (EPS)
Formula: (Net Income - Preferred Dividends) / Weighted Average Shares Outstanding
Description: Indicates profitability per share, often used to assess stock performance.
Accounting KPIs
- Accounts Receivable Turnover
Formula: Net Credit Sales / Average Accounts Receivable
Description: Measures the efficiency of collecting receivables and converting them into cash.
- Days Sales Outstanding (DSO)
Formula: (Average Accounts Receivable / Net Credit Sales) × 365
Description: Represents the average number of days it takes to collect payments after a sale.
- Accounts Payable Turnover
Formula: Purchases / Average Accounts Payable
Description: Indicates how efficiently a company pays its suppliers.
- Days Payable Outstanding (DPO)
Formula: (Average Accounts Payable / Purchases) × 365
Description: Shows the average number of days a company takes to pay its suppliers.
- Inventory Turnover
Formula: Cost of Goods Sold (COGS) / Average Inventory
Description: Reflects how efficiently inventory is managed and sold.
- Days Inventory Outstanding (DIO)
Formula: (Average Inventory / COGS) × 365
Description: Indicates the average number of days inventory remains in storage before being sold.
- Total Asset Turnover
Formula: Net Sales / Average Total Assets
Description: Measures the efficiency of a company in generating sales from its assets.
- Operating Cash Flow Ratio
Formula: Operating Cash Flow / Current Liabilities
Description: Assesses liquidity by comparing cash flow from operations to current liabilities.
- Gross Profit Margin
Formula: (Net Sales - Cost of Goods Sold) / Net Sales
Description: Highlights the proportion of revenue retained after accounting for COGS.
- Net Profit Margin
Formula: Net Income / Net Sales
Description: Indicates overall profitability, showing how much profit is generated per dollar of sales.
