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.

Assets

Assets are essential components held by businesses or individuals with the expectation that they will generate economic value over time.

Balance Sheet

The balance sheet is a financial statement that provides a snapshot of a company’s assets and liabilities, helping investors understand its economic health. This information is typically available in the company's annual report.

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.

Bull Market

A bull market is a period when financial market prices rise consistently over time, driven by strong investor confidence and positive economic conditions.

CASA (Current Account Savings Account) Ratio

The CASA (Current Account Savings Account) Ratio indicates the percentage of a bank's total deposits held in current and savings accounts. It reflects the bank’s profitability and operational cost efficiency, as higher CASA deposits provide low-cost funding and improve margins.

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.

Capital Employed

Capital employed is the total amount of money invested in the business to make profits and run it. Capital employed shows how much money the company is using to generate returns.

Capital Expenditures (CapEx)

Capital Expenditures (CapEx) are funds used by a company to acquire, upgrade, and maintain physical assets such as property, plants, buildings, technology, or equipment.

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 Flow

Cash flow represents the net cash resulting from the adjustment of inflows and outflows in a business. Understanding cash flow periodically is crucial for businesses as it helps them manage operations effectively and sustain day-to-day activities.

Cash Flow Statement

The cash flow statement in an annual report offers a detailed overview of the cash entering and leaving a company over a specific period. Its primary purpose is to provide insights into the company’s liquidity, operational efficiency, and overall financial health.

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.

Cost of Capital

The cost of capital is the minimum rate of return a company must earn on its investments to satisfy its investors and lenders.

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.

Discounted Cash Flow (DCF)

Discounted Cash Flow (DCF) is a valuation method used to estimate the value of a business based on its expected future cash flows, which are adjusted (or "discounted") to their present value using a discount rate.