Skip to content
- EPS (Earnings Per Share): EPS is the portion of a company’s profit allocated to each outstanding share of its common stock. It is a key indicator of a company’s profitability on a per-share basis.
- P/E Ratio (Price-to-Earnings Ratio):
- The P/E ratio, also known as the price-to-earnings ratio, is a valuation metric used to assess the relative value of a company’s stock. It is calculated by dividing the current market price of a share by the company’s earnings per share (EPS). The P/E ratio indicates how much investors are willing to pay for each dollar of the company’s earnings. A higher P/E ratio may suggest that investors have higher expectations for the company’s future growth.
- Non-GAAP (Generally Accepted Accounting Principles):
- Non-GAAP refers to financial measures used by companies that are not prepared according to generally accepted accounting principles. GAAP is a standard framework of accounting principles used to prepare financial statements. However, companies may also provide non-GAAP financial measures, which can exclude certain items, such as one-time expenses, to provide a clearer picture of their ongoing operational performance.
- PSR (Price-to-Sales Ratio):
- The PSR, or price-to-sales ratio, is a valuation ratio that compares a company’s market capitalization (total market value of its outstanding shares) to its total sales revenue over a specific period. It is calculated by dividing the company’s market capitalization by its total revenue. The PSR is used to assess a company’s valuation relative to its revenue-generating capacity.
- ROE (Return on Equity): ROE is a measure of a company’s profitability that calculates the return generated on shareholders’ equity. It is expressed as a percentage and is calculated by dividing net income by shareholders’ equity.
- ROA (Return on Assets): ROA measures a company’s profitability relative to its total assets. It is calculated by dividing net income by total assets and is expressed as a percentage.
- ROI (Return on Investment): ROI is a measure of the return earned from an investment, expressed as a percentage. It is calculated by dividing the gain or loss from the investment by the initial cost of the investment.
- DCF (Discounted Cash Flow): DCF is a valuation method used to estimate the intrinsic value of a stock by projecting its future cash flows and discounting them back to present value.
- M&A (Mergers and Acquisitions): M&A refers to the consolidation of companies through various transactions, such as mergers (combining two companies into one) or acquisitions (one company purchasing another).
- IPO (Initial Public Offering): An IPO is the first time a private company offers its shares to the public, making it a publicly traded company.
- ADR (American Depositary Receipt): ADRs are certificates representing shares of foreign companies traded on U.S. stock exchanges, denominated in U.S. dollars.
- EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization): EBITDA is a measure of a company’s operating performance and cash flow. It represents its earnings before accounting for interest, taxes, depreciation, and amortization expenses.
- Assets: Assets are resources owned by a company that have economic value and can be used to generate future benefits. They are classified into two categories: current assets (short-term assets like cash, accounts receivable, and inventory) and non-current assets (long-term assets like property, plant, equipment, and investments).
- Liabilities: Liabilities are the company’s obligations or debts to external parties. Like assets, they are also divided into two categories: current liabilities (short-term obligations like accounts payable, short-term loans, and accrued expenses) and non-current liabilities (long-term debts like bonds, mortgages, and long-term loans).
- Equity: Equity, also known as shareholders’ equity or net worth, represents the residual interest in the company’s assets after deducting liabilities. It is the value of the company owned by its shareholders. It is calculated as the difference between total assets and total liabilities.
- Current Ratio: The current ratio is a liquidity ratio that measures a company’s ability to pay its short-term obligations. It is calculated by dividing current assets by current liabilities. A higher current ratio indicates better short-term financial health.
- Working Capital: Working capital represents the company’s short-term operating liquidity. It is calculated by subtracting current liabilities from current assets. Positive working capital indicates that the company has enough short-term assets to cover its short-term liabilities.
- Intangible Assets: Intangible assets are non-physical assets with no specific physical substance but still hold significant value for the company. Examples include patents, trademarks, copyrights, and brand names.
- Goodwill: Goodwill is an intangible asset that represents the excess of the purchase price over the fair market value of acquired assets in a business combination. It arises when one company acquires another at a price higher than the acquired company’s net asset value.
- Depreciation: Depreciation is the systematic allocation of the cost of tangible assets (e.g., machinery, buildings) over their estimated useful life. It is used to account for the wear and tear and obsolescence of assets over time.
- Amortization: Amortization is similar to depreciation but applies to intangible assets. It is the process of spreading the cost of intangible assets (e.g., patents, copyrights) over their estimated useful life.
- Accumulated Depreciation: Accumulated depreciation is the total depreciation expense recognized for tangible assets since they were acquired. It appears as a contra-asset account on the balance sheet and reduces the carrying value of the assets.
- Retained Earnings: Retained earnings represent the portion of a company’s net income that is not distributed as dividends but retained and reinvested in the business.