Fundamental Analysis & Valuation
10 terms
Earnings Growth
Fundamental Analysis & Valuation
%
The rate at which a company's profit increases from one period to the next.
Earnings Growth = (Current Period Earnings - Prior Period Earnings) / Prior Period Earnings x 100
Earnings per Share
Fundamental Analysis & Valuation
₹
Net profit attributable to equity shareholders divided by the weighted average number of shares outstanding.
EPS = Profit Attributable to Equity Shareholders / Weighted Average Shares Outstanding
Earnings Quality
Fundamental Analysis & Valuation
qualitative
The extent to which reported profit is backed by cash, is repeatable, and reflects the underlying business rather than accounting choices.
Test: cumulative operating cash flow tracks cumulative net profit over several years, with few exceptional items and stable accounting policies
Earnings Yield
Fundamental Analysis & Valuation
%
Earnings per share expressed as a percentage of the share price — the inverse of the price-to-earnings ratio.
Earnings Yield = Earnings per Share / Market Price per Share x 100 = 1 / P/E x 100
EBITDA Margin
Fundamental Analysis & Valuation
%
EBITDA as a percentage of revenue, measuring operating profitability before depreciation, interest and tax.
EBITDA Margin = EBITDA / Revenue x 100
Economic Value Added
Fundamental Analysis & Valuation
₹ crore
The profit a business earns above the full cost of the capital employed to produce it.
EVA = Net Operating Profit After Tax - (Invested Capital x Weighted Average Cost of Capital)
Effective Tax Rate
Fundamental Analysis & Valuation
%
The tax charge in the accounts expressed as a percentage of profit before tax.
Effective Tax Rate = Total Tax Expense / Profit Before Tax x 100
Enterprise Value
Fundamental Analysis & Valuation
₹ crore
The value of the whole business regardless of how it is financed, equal to market capitalisation plus net debt.
Enterprise Value = Market Capitalisation + Total Debt - Cash and Cash Equivalents + Non-Controlling Interests
EV to EBITDA
Fundamental Analysis & Valuation
ratio (x, times)
Enterprise value divided by EBITDA, valuing the whole business against its operating cash generation before capital charges.
EV/EBITDA = Enterprise Value / EBITDA
EV to Sales
Fundamental Analysis & Valuation
ratio (x, times)
Enterprise value divided by annual revenue, a capital-structure-neutral version of the price-to-sales ratio.
EV/Sales = Enterprise Value / Annual Revenue