Fundamentals

In this section, terms/topic related to finance are covered.

• Asset Growth
  • Asset Growth
    • Formula for Asset Growth:
  • Example:
  • Why It Matters:
  • When Asset Growth Is Positive:
  • When to Be Cautious:
  • Conclusion:
• Current Liabilities vs. Non-Current Liabilities
  • Debt vs. Current Liabilities vs. Non-Current Liabilities
    • 1. Debt
    • 2. Current Liabilities
    • 3. Non-Current Liabilities
    • Summary of Differences:
    • Key Relationship:
• Dividend Yield
  • Dividend Yield
  • Example:
    • In summary:
• EBITDA and EBITDA margin
  • EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization)
    • Formula for EBITDA:
  • EBITDA Margin
    • Formula for EBITDA Margin:
    • Example:
  • Why EBITDA and EBITDA Margin Matter:
  • Key Considerations:
  • Conclusion:
• Economic Rate of Return
  • Economic Rate of Return (ERR)
    • Key Features:
    • Formula:
  • Example:
    • Scenario:
    • Calculation:
    • Difference Between ERR and Other Returns:
    • Why ERR Matters:
• Earnings Per Share (EPS)
  • Earnings Per Share (EPS)
  • EPS Growth
    • Formula for EPS Growth:
    • Example:
    • Why it matters:
• Enterprise Value Over EBITDA (EV/EBITDA)
  • Enterprise Value Over EBITDA (EV/EBITDA)
    • Formula for EV/EBITDA:
    • Example:
    • Why EV/EBITDA Matters:
    • Key Considerations:
    • Conclusion:
    • Why Lower is Better:
    • Why a High EV/EBITDA Can Be Justified:
    • How to Decide:
    • Summary:
• Free Cash Flow (FCF)
  • Free Cash Flow (FCF)
    • Why it’s important:
  • Free Cash Flow Growth
    • Formula for Free Cash Flow Growth
    • Example:
    • Why It Matters:
    • Key Insights:
  • Is it possible that the company has negative cashflow growth becasue of more investment?
    • When Negative FCF Growth Is Acceptable:
    • When Negative FCF Growth Is a Concern:
    • How to Analyze:
    • Conclusion:
• Free Cash Flow Yield
  • Free Cash Flow Yield
    • Components:
    • Interpretation:
  • How much correlation between P/FCF and Free Cash Flow Yield
    • Mathematical Relationship:
    • Correlation:
    • Example of the inverse relationship:
    • Conclusion:
• Net Profit Margin
  • Net Profit Margin
    • Formula for Net Profit Margin:
    • Example:
    • Why Net Profit Margin Matters:
    • Key Considerations:
  • Conclusion:
• Operating Profit/Income
  • Operating Profit/Income
    • Formula for Operating Profit:
    • Key Features:
    • Example:
    • Why It Matters:
  • Operating Income Growth
    • Formula for Operating Income Growth:
    • Example:
    • Why it matters:
• Operating Profit Margin
  • Operating Profit Margin
  • Formula for Operating Profit Margin:
  • Example:
  • Why Operating Profit Margin Matters:
  • Key Considerations:
  • Conclusion:
• Profit after tax (PAT) and PAT margin
  • Profit After Tax (PAT)
    • Formula for PAT:
  • PAT Margin
    • Formula for PAT Margin:
    • Example:
  • Why PAT and PAT Margin Matter:
  • Key Considerations:
  • Conclusion:
• Price-to-Book Ratio
  • Price-to-Book Ratio
  • Number of Shares Outstanding
• Price-to-Earnings (P/E) Ratio
  • Price-to-Earnings (P/E) Ratio
• Price-to-Free Cash Flow (P/FCF) Ratio
  • Price-to-Free Cash Flow (P/FCF) Ratio
    • Why it matters:
• Price-to-Sales Ratio
• Return on Assets (ROA)
  • Return on Assets (ROA)
    • Formula for ROA:
    • Example:
    • Why ROA Matters:
    • Key Considerations:
    • Conclusion:
• Return on Capital Employed (ROCE)
  • Return on Capital Employed (ROCE)
    • Formula for ROCE:
  • Example:
  • Why ROCE Matters:
  • Key Considerations:
  • Conclusion:
• Return on Equity (ROE)
  • Return on Equity (ROE)
    • Formula for ROE:
    • Example:
    • Why ROE Matters:
    • Key Considerations:
    • Conclusion:
  • DuPont analysis
    • Components of the DuPont Model
    • How the DuPont Model Addresses Debt
    • Example Calculation
• Revenue/Sales Growth
  • Revenue Growth
    • Formula for Revenue Growth:
    • Example:
    • Why it matters:
• ROE vs ROCE
  • How ROE and ROCE are different?
    • ROE (Return on Equity) vs. ROCE (Return on Capital Employed)
    • 1. ROE (Return on Equity)
    • 2. ROCE (Return on Capital Employed)
    • Key Differences
    • When to Use ROE vs. ROCE
    • Example:
    • Conclusion:
• ROI vs ROCE
  • Is Return on Investment same as ROCE?
    • Return on Investment (ROI):
    • Return on Capital Employed (ROCE):
    • Key Differences:
• Weighted Average Shares Outstanding
  • Weighted Average Shares Outstanding
  • Example
    • Step-by-Step Calculation
    • Weighted Average Shares Outstanding