Glossary

Asset Turnover Ratio

The Asset Turnover Ratio evaluates how efficiently a company converts its assets into sales, providing insights into its operational performance and resource utilisation.

Book Value Per Share (BVPS)

Book Value Per Share (BVPS) is the amount of equity available if the company were to liquidate all its assets and settle all its liabilities on a per-share basis.

Capital Adequacy Ratio (CAR)

The Capital Adequacy Ratio (CAR) is a financial metric that measures a bank’s ability to absorb potential losses and maintain financial stability by ensuring it has sufficient capital to manage risks and meet regulatory requirements.

Cash Conversion Cycle (CCC)

The Cash Conversion Cycle (CCC) is a working capital metric that measures the number of days a company takes to convert its investments in inventory and other operational resources into cash generated from sales.

Cash Ratio

Cash ratio provides a quick check of how strong a company’s cash position is in terms of clearing short-term debts using only cash and cash equivalents.

Credit-Deposit Ratio

The credit deposit ratio is a financial ratio of the total loans lent by a bank to the total deposits received in the same period. The credit deposit ratio is an indicator of the bank's ability to cover loan losses and withdrawals by its customers.

Days Payable Outstanding (DPO)

Days Payable Outstanding (DPO) measures the average time a company takes to pay its suppliers after receiving inventory, raw materials, or services on credit. It is widely used to evaluate liquidity and working capital management.

Days Receivable

Days receivable is the average number of days the business takes for its credit sales to be converted into cash. This financial metric measures the operational efficiency with which a company collects money from credit purchases.

Days Sales of Inventory (DSI)

Inventory Days (DSI) is an efficiency metric that measures the average number of days a company takes to convert its inventory into sales. It helps investors assess how effectively a business manages its inventory and generates revenue from its stock.

Debt-to-Equity (D/E) Ratio

The Debt-to-Equity (D/E) Ratio is a financial ratio that compares a company’s total debt with its shareholders’ equity to measure how much the business relies on borrowed funds versus owner capital for financing its operations and growth.

Dividend Yield

Dividend yield shows how much money is given to shareholders in dividends compared to the stock price. For investors seeking steady cash flow, like retirees, dividend yield is a key factor in choosing stocks.

EV/EBITDA Ratio

The EV/EBITDA ratio calculates the overall value of a company compared to its earnings before interest, taxes, depreciation, and amortisation. It is also known as the enterprise multiple.

Earnings Before Interest, Taxes, Depreciation, and Amortisation (EBITDA)

EBITDA stands for "Earnings Before Interest, Taxes, Depreciation, and Amortisation". It is a measure of a company's overall financial performance and is often used as an alternative to simple earnings or net income.

Efficiency Ratios

Efficiency ratios are a set of ratios that measure how effectively a company uses its assets and liabilities to generate income and manage operations.

Equity Dividend Rate

The Equity Dividend Rate shows how much of a company’s profit is paid to shareholders as dividends. It tells you what percentage of your share’s value you’re getting back as income.

Gross Margin

Gross Margin represents the portion of revenue that remains after deducting the Cost of Goods Sold (COGS). It shows how efficiently a company produces and sells its products before accounting for operating expenses, taxes, and interest.

Gross Non-Performing Assets (NPA)

Gross NPA (Non-Performing Assets) represents the total value of loans for which borrowers have failed to make timely payments. It reflects the bank's overall credit risk and indicates the quality of its loan portfolio.

Interest Coverage Ratio (ICR)

The Interest Coverage Ratio (ICR) is a financial metric that measures how easily a company can pay its interest expenses using its operating profit. It helps investors evaluate a company’s financial stability and its ability to manage debt obligations without financial stress.

Interest Spread

Interest Spread is the difference between the average lending rate (the rate a bank charges on loans) and the average deposit rate (the rate it pays on deposits). It measures a bank's core profitability from its lending and deposit-taking activities.

Inventory Turnover Ratio

The inventory turnover ratio shows how often a company sells and replaces its inventory. It helps investors understand how well the company manages its inventory and how profitable it might be.