Fundamental Analysis & Valuation
70 terms · page 2 of 3
Economic Value Added
The profit a business earns above the full cost of the capital employed to produce it.
Fundamental Analysis & ValuationEffective Tax Rate
The tax charge in the accounts expressed as a percentage of profit before tax.
Fundamental Analysis & ValuationEnterprise Value
The value of the whole business regardless of how it is financed, equal to market capitalisation plus net debt.
Fundamental Analysis & ValuationEV to EBITDA
Enterprise value divided by EBITDA, valuing the whole business against its operating cash generation before capital charges.
Fundamental Analysis & ValuationEV to Sales
Enterprise value divided by annual revenue, a capital-structure-neutral version of the price-to-sales ratio.
Fundamental Analysis & ValuationFinancial Leverage
The use of borrowed money to increase the return on shareholders' capital, and the risk that comes with it.
Fundamental Analysis & ValuationForward Price-to-Earnings
The price-to-earnings ratio computed using forecast earnings for a future period rather than reported ones.
Fundamental Analysis & ValuationFree Cash Flow to Equity
The cash available to shareholders after operating costs, capital expenditure, debt interest and net debt movements.
Fundamental Analysis & ValuationFree Cash Flow to Firm
The cash generated by operations available to all capital providers, before any payments to lenders or shareholders.
Fundamental Analysis & ValuationFree Cash Flow Yield
Free cash flow expressed as a percentage of market capitalisation or enterprise value.
Fundamental Analysis & ValuationFundamental Analysis
The study of a company's financial statements, industry and economics in order to estimate what its shares are worth.
Fundamental Analysis & ValuationGordon Growth Model
A single-stage dividend discount model that values a share assuming dividends grow at a constant rate forever.
Fundamental Analysis & ValuationGross Margin
Gross profit as a percentage of revenue, showing what proportion of each sale survives the direct cost of producing it.
Fundamental Analysis & ValuationGrowth at a Reasonable Price
An approach that seeks companies growing above average while refusing to pay a multiple that assumes the growth continues indefinitely.
Fundamental Analysis & ValuationGuidance
A company's own published expectation for a future financial metric, such as revenue growth or margin.
Fundamental Analysis & ValuationImpairment
A write-down of an asset's carrying value when its recoverable amount falls below what the balance sheet records.
Fundamental Analysis & ValuationInterest Coverage Ratio
Operating profit divided by interest expense, measuring how many times over the company's earnings can pay its interest bill.
Fundamental Analysis & ValuationIntrinsic Value
The value of a business justified by the cash it can be expected to produce over its life, discounted to today.
Fundamental Analysis & ValuationInventory Turnover Ratio
Cost of goods sold divided by average inventory, showing how many times stock is sold and replaced in a year.
Fundamental Analysis & ValuationMargin of Safety
The discount between the price paid for a security and the analyst's estimate of its intrinsic value.
Fundamental Analysis & ValuationMoat
A durable structural advantage that lets a company earn returns above its cost of capital for many years without being competed away.
Fundamental Analysis & ValuationNet Debt
Total borrowings less cash and readily realisable investments, measuring debt after the cash available to repay it.
Fundamental Analysis & ValuationNet Profit Margin
Net profit as a percentage of revenue, showing what proportion of each rupee of sales the company finally keeps.
Fundamental Analysis & ValuationOperating Leverage
The degree to which a company's fixed costs amplify the effect of a revenue change on its operating profit.