Financial ratios

EBITDA Margin for Small Businesses EBITDA margin for small businesses often differs from large public company benchmarks due to scale, working capital needs, and tax efficiency choices. Explains common distortions and realistic targets.

EBITDA Margin vs Operating Margin: Key Differences Explained EBITDA margin vs operating margin: understand which metric suits your analysis, how D&A distortion affects each, and when to use one over the other.

EBITDA Per Share EBITDA per share divides EBITDA by share count to measure operating earnings per share. Learn when analysts use it instead of EPS and why capital structure matters for comparison.

EBITDA to Interest Coverage Ratio A solvency metric measuring operating cash generation relative to interest obligations, commonly used in covenant tests for leveraged transactions.

EBITDA-to-Revenue Ratio Operating cash earnings as a percentage of revenue, isolating operating margin from debt and accounting policy.

Efficiency Ratios in Bank Analysis: How Lenders Are Scored Efficiency ratio in bank analysis explained. Non-interest expense divided by revenue reveals how much of each dollar banks spend running the business.

Enterprise Value Enterprise value is the total economic cost to buy a company, calculated as market cap plus debt minus cash. It is the foundation for leverage-neutral valuation multiples.

Enterprise Value-to-FCF Ratio Enterprise value divided by free cash flow. A valuation metric that shows how many years of cash flow the company's total value represents.

Enterprise Value-to-Revenue A company's total value (market cap plus debt minus cash) divided by annual revenue. A valuation metric that works even for unprofitable companies.

Equity Multiplier Ratio A leverage ratio measuring how many dollars of assets are financed by each dollar of shareholder equity, exposing financial risk in the DuPont framework.

Equity Q A valuation metric comparing a company's market capitalisation to its net worth (total assets minus liabilities) to assess whether the stock price is above or below accounting value.

Equity Turnover Ratio Metric that measures how much revenue a company generates for every dollar of shareholder equity invested.

EV Per Subscriber as a Valuation Metric How subscription businesses are valued on enterprise value per subscriber; drivers of the metric across streaming, telecoms, and SaaS.

EV/EBIT Ratio EV/EBIT divides enterprise value by operating income, similar to EV/EBITDA but excluding depreciation and amortization.

EV/EBIT Ratio Enterprise value divided by operating profit; a valuation metric that isolates operating performance from capital structure and taxes.

EV/EBIT vs EV/EBITDA: When Depreciation Matters Understand the EV/EBIT vs EV/EBITDA difference and why ignoring depreciation can overvalue capital-intensive businesses.

EV/EBITA Ratio EV/EBITA ratio strips acquisition-driven amortization from earnings, useful for comparing serial acquirers and businesses with significant intangible asset bases.

EV/EBITDA Benchmarks by Industry Why EV/EBITDA multiples vary across sectors and how to interpret industry-specific valuation benchmarks for overvalued or undervalued stocks.

EV/EBITDA for Capital-Intensive Companies: Limitations and Adjustments How EV/EBITDA can overstate value for capital-intensive companies by ignoring large maintenance capex, and what adjustments analysts use instead.

EV/EBITDA for Capital-Intensive Industries EV/EBITDA for capital-intensive industries is the preferred valuation multiple because it ignores depreciation and reflects cash earning power in asset-heavy sectors.

EV/EBITDA for Real Estate Companies EBITDA is rarely used to value REITs and property companies because real estate cash flows depend on depreciation and debt service, not operating earnings. FFO and AFFO are the standard metrics.

EV/EBITDA Ratio The EV/EBITDA ratio divides enterprise value by earnings before interest, taxes, depreciation, and amortization. It is widely used to compare companies with different capital structures and ages.

EV/EBITDA vs Price-to-Earnings: Which to Use Compare EV/EBITDA and P/E multiples: when each is preferred, why capital structure matters, and how to pick the right metric for valuation.

EV/FCF Ratio EV/FCF divides enterprise value by free cash flow, showing how many years of cash flow it takes to pay for the company.

EV/Gross Profit Ratio A valuation metric using gross profit as the denominator when operating expenses vary widely across similar companies or growth-stage peers.

EV/Invested Capital Ratio A valuation metric that compares enterprise value to total capital invested in the business to assess returns on deployed capital.

EV/Net Revenue Ratio Enterprise value divided by revenue after returns and discounts; more accurate than EV/gross revenue when comparing firms with different pass-through cost models.

EV/NOPAT Ratio Enterprise value divided by net operating profit after tax; a capital-structure-neutral measure of how many dollars of enterprise value investors pay per dollar of operating earnings.

EV/Sales for Early-Stage Companies Why revenue multiples become the primary valuation anchor for startups with no earnings, and what growth and margin benchmarks justify high multiples.

EV/Sales Ratio EV/Sales divides enterprise value by annual revenue, providing a valuation metric for unprofitable or low-margin companies.

EV/Sales vs Price-to-Sales: Which to Use Compare enterprise-value-to-sales and price-to-sales ratios, explaining when debt load makes EV/Sales more accurate for cross-company comparisons.

EV/Unlevered Free Cash Flow Comparing firms with different capital structures by valuing enterprise value against cash flow before interest tax shields.

Ex-Ante vs Ex-Post Tracking Error Ex-ante vs ex-post tracking error: predicted divergence from a benchmark before the period versus realized divergence measured afterward.

Expense Ratio (Profitability) Operating expenses as a percentage of revenue; a measure of cost efficiency and operational leverage.

FCF to Net Income A profitability ratio measuring the quality of earnings based on cash generation relative to reported net income.

FCF Yield Free cash flow per share divided by stock price, expressed as a percentage. A stricter cash-based alternative to earnings yield.

Financial Leverage Ratio A metric measuring average total assets against average equity, quantifying how much debt amplifies returns and risk.

Five-Factor DuPont Model Extended decomposition of return on equity into tax burden, interest burden, operating margin, asset turnover, and financial leverage.

Fixed Asset Turnover Fixed asset turnover divides revenue by average fixed assets, measuring how efficiently a company uses its property, plant, and equipment.

Fixed Asset Turnover Ratio Explained Fixed asset turnover ratio measures how efficiently a company converts fixed assets into revenue. Learn how to calculate it and interpret high vs. low values.

Fixed Asset Turnover vs Total Asset Turnover Understand when fixed asset turnover isolates production efficiency, and when total asset turnover reveals overall capital deployment across all asset classes.

Fixed Charge Coverage Ratio vs Interest Coverage Ratio Explains the difference between fixed charge coverage and interest coverage ratios. Fixed charge coverage includes all fixed obligations like leases and debt payments; interest coverage focuses on debt service alone.

Fixed-Charge Coverage Ratio Fixed-charge coverage divides EBIT by all fixed obligations (interest, rent, debt principal, leases), measuring whether operating income covers all committed payments.

Forward EV/EBITDA Ratio Forward EV/EBITDA uses next-twelve-months estimates instead of trailing earnings. Learn how consensus forecasts feed this ratio and why it can mislead during earnings revisions.

Forward P/E vs Trailing P/E: Key Differences Understand the difference between forward P/E and trailing P/E—one uses expected earnings, the other historical results. Learn when each metric matters most.

Forward Price-to-Earnings Ratio A valuation multiple comparing current stock price to next-twelve-months consensus earnings estimates to assess whether growth expectations are priced in.

Four-Wall EBITDA EBITDA at the unit level, excluding corporate overhead; widely used in retail and restaurant valuation.

Franchise Value Multiple A conceptual decomposition of P/E ratio into the present value of tangible assets in place and the premium paid for future growth opportunities and franchise intangibles.

Free Cash Flow Coverage Ratio measuring how many times a company's free cash flow can cover its debt obligations.

Funded Debt to EBITDA A leverage ratio dividing long-term, interest-bearing debt by operating earnings before interest, taxes, depreciation, and amortisation, isolating structural leverage from trade payables and short-term noise.

Gamma (Option Greeks) The rate of change of delta with respect to the underlying asset price, measuring curvature of option value.

Graham Number Benjamin Graham's formula for estimating a stock's intrinsic value as the geometric mean of earnings and book value per share, adjusted for quality factors.

Gross Margin Analysis Profitability after direct production costs, revealing manufacturing efficiency and pricing power.

Gross Margin Bridge Analysis A waterfall chart decomposing year-over-year gross margin changes into price, volume, mix, and cost drivers, with a worked example.

Gross Margin in Cyclical vs Defensive Stocks Why gross margin benchmarks differ between cyclical and defensive stocks; how to compare margins across industries.

Gross Margin Return on Investment Gross profit dollars earned per dollar of average inventory; connects inventory efficiency to profitability.

Gross Margin vs Net Margin: What Each Profitability Ratio Shows Gross margin vs net margin difference explained. Gross margin measures production costs; net margin includes all operating, tax, and financing expenses.

Gross Margin vs Operating Margin How gross margin and operating margin differ, why the gap reveals overhead costs, and what each metric tells about profitability.

Gross Profit Margin Gross profit margin divides gross profit by revenue, showing what percentage of sales remains after paying for the cost of goods sold. It is a measure of pricing power and production efficiency.

Gross Profit Per Employee Gross profit per employee measures workforce productivity in generating revenue minus direct costs. Learn how it differs from revenue per employee and typical benchmarks.