1.Profit Margin
Net profit margin = (Net Income / Revenue) * 100
A profit margin of 15% means that for every $100 in sales, the company generates a profit of $15.
2. Return On Equity (ROE)
ROE = Net Income / Average Shareholders' Equity
A ROE of 25% means that an investment of $100 in the company generates $25 in yearly profits for you.
3. EBIT Margin
EBIT Margin = (Earning Before Interest and Taxes / Revenue) * 100
An EBIT Margin of 20% means that for every $100 in sales, the company generates $20 in profit before interest and taxes.
4. EBITDA Margin
EBITDA Margin = (EBITDA/Revenue)*100
This ratio measures a company's operating profit as a percentage of its revenue.
5. Cash Flow to Net Income Ratio
CFNI Ratio = Operating Cash Flow / Net Income
This ratio measures how much earnings are translated into pure cash. The higher this ratio, the better.
6. Return On Assets (ROA)
ROA = (Net Income / Average Total Assets)
A ROA of 5% tells you that the company generates $5 in profits for every $100 of assets the company has.
7. Return On Capital Employed (ROCE)
ROCE = EBIT / (Long Term Debt + Equity)
This metric measures a company's ability to generate profits from the capital that is actually employed in the business.
8. Operating Cash Flow Margin
Operating Cash Flow Margin = (Operating Cash Flow / Revenue)*100
This ratio rates shows how well the business converts sales to cash.
9. Operating Expense Margin
Operating Expense Margin = (Operating Expense / Revenue)*100
This metric rates how efficiently the company is managing indirect costs. The lower this ratio, the better.
10. Return On Invested Capital (ROIC)
ROIC = NOPAT / Invested Capital
The ROIC measures how efficiently a company is allocating its capital. Seek for companies with a ROIC higher than 15%.
Comments