In simple layman’s language, Free Cash Flow means: “The actual cash a company has left over after paying for its daily business needs and maintenance of its assets (like machines, buildings, etc.).” It’s the real money a company can use for: 🧮 Formula: Free Cash Flow (FCF) = Operating Cash Flow – Capital Expenditures 🏪…
PEG stands for Price / Earnings to Growth ratio. In simple layman’s language: The PEG ratio helps you know if a stock is overvalued or undervalued by looking at: 🔹 The P/E ratio (Price to Earnings)🔹 And the company’s expected growth rate 🧮 PEG Ratio Formula: PEG Ratio = (P/E Ratio) ÷ (Earnings Growth Rate)…
EBIT stands for Earnings Before Interest and Taxes. In simple, layman’s terms: EBIT tells you how much profit a company makes from its core business operations, before paying any interest on loans and before paying taxes. 🧮 EBIT Formula: There are two common ways to calculate EBIT: 🏪 Simple Example (Grocery Shop): Let’s say: Then:…
In simple layman’s terms, the Debt-to-Equity Ratio (D/E Ratio) tells you: “How much money a company has borrowed (debt) compared to how much the owners/shareholders have invested (equity).” 🧮 Formula: Debt-to-Equity Ratio = Total Debt ÷ Shareholders’ Equity 🏪 Example (Small Shop): Let’s say you run a small business. Now calculate: Debt-to-Equity Ratio = ₹2,00,000…
ROA (Return on Assets) tells you: “How much profit a company earns for every rupee it has in total assets.” It shows how efficiently a company is using what it owns (its buildings, machines, vehicles, etc.) to make money. 🧮 Simple Formula: ROA = Net Profit ÷ Total Assets × 100 🏪 Layman’s Example: A…
🏪 Imagine You Run a Small Shop You buy goods for ₹60 and sell them for ₹100.You also pay for shop rent, salary, electricity, and other expenses. 🔹 1. Gross Margin (Basic Profit from Selling Products) 👉 What it tells you:How much money you made after subtracting the cost of the product you sold. 🧮…
The Piotroski Score is a number from 0 to 9 that helps investors figure out how healthy a company is financially—especially companies with cheap stock prices (also called value stocks). It was created by Joseph Piotroski, an accounting professor at Stanford University. Think of it like a report card for a company’s finances: 🧠 Why…
In layman’s terms, the face value of a stock (also called par value) is the original value assigned to a share when the company first creates it. Think of it like this: Imagine a company is born and it decides to create 1,000 shares. It gives each share a face value of ₹10 (or $10)….
Intrinsic Value is what a stock is really worth — not based on its price today, but based on the actual financial health of the company. Think of it like the true value of a business based on: It’s what an investor believes the company is actually worth, even if the current market price says…
Book value of a share is the value of a company’s assets (things it owns) minus its liabilities (what it owes), divided by the number of shares.It tells you what each share would be worth if the company was closed down and all its assets were sold and debts paid off. Think of it like…
