Gross Margin (%)
The percentage of revenue that exceeds the cost of goods sold. High margins often signal a strong economic moat.
Financial Lexicon
Find key metrics quickly, understand why they matter, and keep your analysis moving.
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32
Profitability & Efficiency
The Engine Check
4 terms
Operating Margin (%)
Profit left after paying for variable costs like wages and raw materials. Shows operational efficiency.
ROIC (Return on Invested Capital)
Measures how effectively a company uses its money to generate profit. A primary metric for value investors.
Asset Turnover
How efficiently a company uses its assets to generate sales.
Growth & Velocity
Momentum Check
4 terms
Revenue Growth (YoY)
Percentage increase in revenue over the same period last year. Indicates market demand and sales momentum.
EPS Growth
Earnings Per Share growth. Shows if a company's bottom-line profitability is keeping pace with its sales.
Retention Ratio
The percentage of net income retained to be reinvested in the company rather than paid as dividends.
CAGR
Compound Annual Growth Rate. The mean annual growth rate of an investment over a period longer than one year.
Management & Quality
Leadership Check
4 terms
ROE (Return on Equity)
Measures profitability by revealing how much profit a company generates with shareholder capital.
Shareholder Yield
The sum of dividend yield, net buyback yield, and debt reduction yield. A measure of total capital return.
Insider Ownership
The percentage of a company's stock owned by management and directors. Higher ownership can align incentives.
Capital Allocation Efficiency
How effectively management reinvests profits into projects that earn high returns.
Solvency & Debt
Safety Check
4 terms
Debt-to-Equity (D/E)
Measures the company's financial leverage. Higher D/E usually indicates higher balance-sheet risk.
Interest Coverage Ratio
How easily a company can pay interest on its debt. A critical safety metric.
Current Ratio
Ability to pay short-term obligations that are due within one year.
Altman Z-Score
A predictive formula used to estimate the probability of corporate distress or bankruptcy.
Market Dynamics & Risk
Volatility Check
4 terms
Beta
A measure of a stock's volatility relative to the overall market. Beta above 1 means more volatility than the market.
WACC
Weighted Average Cost of Capital. The average rate a business pays to finance its assets.
Max Drawdown
The largest observed loss from peak to trough before a new peak is reached.
Equity Risk Premium
The extra return expected from equities compared with a risk-free asset such as government bonds.
Advanced Valuation
Price Check
4 terms
P/S Ratio (Price-to-Sales)
Useful for companies that are not yet consistently profitable, often seen in innovation-led sectors.
EV/EBITDA
A valuation metric that considers the whole business value, including debt.
Forward P/E
Price relative to expected future earnings rather than historical earnings.
Price-to-Book (P/B)
Compares market valuation with the company's book value on the balance sheet.
Cash Flow & Yield
Reality Check
4 terms
FCF Yield (%)
Free Cash Flow divided by Market Cap. Shows cash generation relative to current price.
Dividend Payout Ratio
The percentage of earnings paid to shareholders as dividends.
Operating Cash Flow (OCF)
Cash generated by a company's core business operations.
CapEx (Capital Expenditure)
Money spent to maintain or upgrade fixed assets such as plants, property, or equipment.
Strategy & Moats
Competitive Edge Check
4 terms
Economic Moat
A business's ability to sustain competitive advantages and protect long-term profits.
Switching Costs
The costs a customer incurs when moving from one supplier or product to another.
Network Effect
A phenomenon where a product becomes more valuable as more people use it.
Margin of Safety
The gap between intrinsic value and market price, giving protection against valuation errors.