Profitability ratios are used to assess a business's ability to generate earnings relative to its revenue, balance sheet assets, or over time, using data from a specific point in time.
Selling, General & Administrative expenses (SG&A) include all everyday operating expenses of running a business that is not included in the production of goods or delivery of services.
The Sales Growth Index measures the extent to which sales are growing year over year. An index value greater than 1 represents growth in sales.
Revenue concentration is a measure of how total revenue is distributed among your customer base. A business serving a large number of small-volume customers has a lower customer concentration than a business where a handful of large customers account for the majority of its business.
The return on equity is a measure of the profitability of a business in relation to the equity, it is considered a gauge of how efficient it is in generating profits. It is calculated by dividing net income by shareholders' equity.
The operating margin measures how much profit a business makes on a dollar of sales after paying for variable costs of production before paying interest or tax. It is calculated by dividing a business' operating income by its net sales. Higher ratios are generally better, illustrating the business is efficient in its operations and is good at turning sales into profits.
The net profit margin is used to calculate the percentage of profit a business produces from its total revenue. It measures the amount of net profit a business obtains per dollar of revenue gained. The net profit margin is equal to the net income divided by the total revenue
Gross margin is the net sales less the cost of goods sold (COGS). It is the amount of money a business retains after incurring the direct costs associated with producing the goods it sells and the services it provides.
Working capital assesses a business's ability to pay its current liabilities with its current assets, providing an indication of the subject’s short-term financial health, capacity to clear its debts within a year, and operational efficiency.
The EBITDA margin is a measure of a business' operating profit as a percentage of its revenue, which allows for a comparison of one business' real performance to others in its industry.
EBITDA stands for Earnings Before Interest, Taxes, Depreciation, and Amortization. It is a metric used to evaluate a business' operating performance.
Revenue is the sum of all sources of income from the company's income statement, factoring in discounts and returns.
Liquidity ratios are used to determine a debtor's ability to cover short-term debt obligations and cash flows.
Cash balance is taking all cash and cash equivalent accounts from your balance sheet
The cash ratio is a metric that indicates a business's capacity to pay off short-term debt obligations with its cash and cash equivalents. Only cash and cash equivalents are used in the calculation.
Runway refers to the amount of time a business has before it runs out of cash. The runway is calculated by dividing the total cash into the founder's bank accounts by the Net Burn.
Gross burn is a calculation of outgoing cash, combining all of your monthly expenses as found on your income statement to determine your burn rate.
The current ratio measures a business's ability to pay short-term obligations or those due within one year.
The absolute liquidity ratio measures the total liquidity available to the business. This ratio only considers marketable securities and cash available to the business.
The quick ratio (also referred to as the acid test ratio) is used to measure a business's ability to pay down its current liabilities with its most liquid assets.
The gross burn rate is a business' operating expenses. It is calculated by summing all its operating expenses such as rent, salaries, and other overhead, and is often measured on a monthly basis. It also provides insight into a business's cost drivers and efficiency, regardless of revenue.
Leverage ratios help determine the extent to which a firm depends on debt for purchasing assets and building capital. It helps investors and creditors assess the ability of a firm to meet its financial obligations.
The Debt Service Coverage Ratio (DSCR) is used to measure the ability of a business to use its operating income to repay all its debt obligations, including repayment of principal and interest on both short-term and long-term debt.
The debt to enterprise value (D/EV) ratio is used to indicate how leveraged the business is relative to its value.
The leverage index is a ratio that measures the proportion of a business' debt compared to its equity which is used to make money and produce income. It is a gauge used to determine how good or bad a business is utilizing its debts
The debt-to-asset ratio is a measure of the business assets that are financed by debt rather than equity.
The interest coverage ratio is a debt and profitability ratio used to determine how easily a business can pay interest on its outstanding debt. It may be calculated as either EBIT or EBITDA divided by the total interest expense.
The debt to equity (D/E) ratio is used to indicate the relative proportion of shareholders' equity and debt used to finance a business's assets. It is calculated by dividing a business’s total liabilities by its shareholder equity.