The determinants of supply are crucial in economics, forming the foundation of functioning markets and the economy. Key determinants of pricing, labor, taxes, competition, suppliers, and technology cause the supply of goods and services to change.
Economic value added, or EVA is a sophisticated measure for assessing a company's financial performance and creating shareholder wealth by measuring the residual income after deducting the cost of capital.
Inventory to Sales Ratio is a crucial financial metric indicating the relationship between a company's inventory and sales volume. It sheds light on the efficiency of inventory management and plays a significant role in assessing performance against industry benchmarks.
Income elasticity of demand is an economic measure showing how demand responds to consumer income changes. This metric helps businesses and economists understand how economic changes affect the demand for goods.
Financial leverage refers to using borrowed funds to increase the potential return on investment. It magnifies potential gains and losses, vital to a company's capital structure.
Cash on Hand is a financial metric indicating the amount of liquid capital available to an individual or business. For businesses, it includes physical currency, funds in bank accounts, and liquid assets readily convertible to cash.
The Price/Earnings to Growth (PEG) ratio helps investors find growth at a reasonable price. The PEG ratio is an incredibly valuable metric calculated by dividing the Price-to-Earnings (P/E) ratio by the company's earnings growth rate.
A price floor is a government-imposed limit on how low a price can be charged for a product, service, or commodity. This is designed to ensure the price stays high enough to protect the interests of producers, often at a point above the natural market equilibrium where supply equals demand.
FCCR is a financial metric determining how well a business can cover its fixed charges with its operating income. It is calculated by dividing Earnings Before Interest and Taxes (EBIT) by fixed charges. Fixed charges typically include expenses such as interest expense and lease payments.
Operating Profit Margin, often represented as a ratio or percentage, reflects the proportion of revenue after accounting for the costs and expenses associated with a company's primary operations.
The payout ratio, also known as the dividend payout ratio, is a critical financial metric that investors use to evaluate the sustainability of a company's dividend payments.
Total asset turnover is a financial metric used to assess a company's efficiency in using its assets to generate sales. It is a vital ratio for investors and analysts seeking to understand how well a company utilizes its asset base to produce revenue.
The Times Interest Earned Ratio, or TIE, is a financial metric for gauging a company's ability to settle its interest obligations. By assessing the number of times a company could theoretically cover its interest payments with its current pretax earnings, it offers a clear view of financial health, particularly regarding solvency and risk.
By breaking down ROE into profitability, efficiency, and leverage factors, DuPont Analysis allows investors and analysts to pinpoint the strengths and weaknesses of a firm's financial health.
The Return on Average Equity (ROAE) financial ratio measures a company's profitability by comparing its net earnings to average shareholders' equity.
The debt-to-capital ratio measures a company's financial stability and leverage by comparing its total debt to its capital base, including debt and equity. It provides insight into what proportion of a company's operations is financed by debt versus shareholders' equity.
The Debt-to-EBITDA ratio assesses a company's ability to pay off its debt. It compares a company's total debt to earnings before interest, taxes, depreciation, and amortization (EBITDA).
The Long-term debt ratio is a financial metric investors use to assess a company's use of long-term debt for financing its operations. A high long-term debt ratio over 25% indicates a higher investing risk, whereas a low ratio indicates a company is in better financial shape.
The Net Profit Ratio is a key financial ratio for better investing, telling us how efficiently a company generates profit compared to its revenue and competitors.
Return on Common Stockholder's Equity (ROCE) is a financial ratio measuring the profitability relative to the common equity shareholders have invested in a company.
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