What is the Price-to-Sales (P/S) Ratio? The Price-to-Sales (P/S) Ratio is a financial ratio that measures the value of a company’s stock relative to its sales. What is price to book ratio? Price to book ratio is a financial ratio that is used to compare a company’s market value to its book value. The market … Read more
Key rate duration is a measure of a bond’s sensitivity to changes in interest rates. It is calculated by multiplying the modified duration of a bond by its key yield. Key rate duration can be used to hedge against interest rate risk or to take advantage of changes in interest rates. Modified duration is a … Read more
What is the Debt-to-Capital Ratio? The debt-to-capital ratio is a financial ratio that measures a company’s debt relative to its total capital. The debt-to-capital ratio is used to assess a company’s financial leverage. Formula The debt-to-capital ratio is calculated by dividing a company’s total debt by its total capital. Example For example, if a company … Read more
The compound annual growth rate (CAGR) is the mean annual growth rate of an investment over a specified period of time longer than one year. To calculate the compound annual growth rate, you divide the value of an investment at the end of the period by its value at the beginning of the period, and … Read more
The return on risk-adjusted capital (RORAC) is a financial ratio that measures the return on a company’s investment after taking into account the risk associated with that investment. To calculate RORAC, the return on investment (ROI) is divided by the risk-adjusted return on capital (RAROC). RAROC is a measure of the return on an investment … Read more
APY, or annual percentage yield, is a measure of the total return on an investment over a one-year period, including interest, dividends, and capital gains. To calculate APY, divide the total return by the original investment, then multiply by 100 to get a percentage. For example, if you invest $100 and earn a total return … Read more
Net Asset Value (NAV) per share is the value of a company’s assets divided by the number of shares of its stock outstanding. NAV can be used to measure the performance of a company or mutual fund, as well as the overall market. For ETFs and mutual funds, NAV is the market value of the … Read more
What is the Receivables Turnover Ratio? The receivables turnover ratio is a financial metric used to measure a company’s efficiency in collecting its receivables. The ratio is calculated by dividing a company’s sales by its average receivables. Why is the Receivables Turnover Ratio Important? The receivables turnover ratio is important because it is a measure … Read more
The free asset ratio (FAR) is a measure of an insurance company’s financial strength. It is calculated by dividing the company’s total assets by its policyholders’ surplus. The higher the ratio, the more financial cushion the company has to absorb losses. For example, a company with a FAR of 2.0 has twice as much in … Read more
ROE is a financial ratio that measures the profitability of a company in relation to its shareholders’ equity. The higher the ROE, the more profitable the company is in relation to its shareholders’ equity. There are a few different ways to calculate ROE, but the most common is to divide the company’s net income by … Read more
