In this category you can find useful tools for calculating important financial metrics. Those metrics are crucial for professional investors, because they provide important business data in standardized form and allow the analysis of different aspects of a company's performance to compare it with competitors and industry averages.
What are financial metrics?
Financial metrics are indicators that give a straight answer about certain aspects of the business. Each financial metric sends a unique signal about a company's efficiency.
Each indicator also ignores the data outside its spectrum. So to perform useful analysis an investor needs to analyze several different factors in order to drive to the right conclusions.
Two groups of business metrics
Business metrics can be divided into two groups: cash flow metrics and financial statement metrics.
Cash flow metrics describe how the company manages the flux of money or helps evaluate what is the future value of current investments. The most populars indicators in this kind are: net cash flow, cumulative cash flow, present value, future value, payback period, ROI, IRR, break even point and CAGR.
Financial statement metrics on the other hand describe a company's profitability and effectiveness in utilizing its resources. This group of metrics is used to compare business performance over time or with industry benchmarks.
Financial statement metrics
This category focuses mostly on this group of metrics. On Calcopolis we provide online calculators for most popular indicators. Each tool provides several ways of calculating a particular metric, depending on what input data you know.
Apart from calculations each tool contains detailed information about the metric, possible applications and limitations of each metric that you need to be aware of in order to perform valid analisis.
By performing liquidity analysis you can tell if the company could meet its short term obligations. The most useful examples of such indicators are Working Capital, Current Ratio, accounts payable turnover and cash conversion cycle.
Metrics from this subgroup help determine how efficient a company is in utilizing its resources. The most prominent representatives of this group are: Sales Revenues per employee, Cash Conversion Cycle, Total Asset Turnover, Fixed Asset Turnover, inventory turns, days sales in inventory, Accounts receivable turnover.
Indicators from this group answers the question about sources of financing the growth shareholders equity or debt. If a company uses debt you could analyze to what extent credit fuels the business by calculating total debt to asset or total debt to equity ratio.
This category holds the indicators of companies efficiency in generating profits. Using these metrics you can check if a company is profitable or not. If the margins are acceptable and finally if the company efficiently turns its assets into profits.
The most important metrics from this group include gross profit margin, EBIT, EBITDA, ROA, ROCE, ROE and EPS.
Using metrics from this category you can estimate the market value of the company. The business can be valued based on its prospects for future profits or its book value. The most prominent representatives of this group include: book value per share, market to book ratio, earnings per share EPS, P/E Price to earnings ratio.
Rate of growth is for sure the most important aspect of the business. It reveals not only future prospects of the company, but tells a lot about the quality of the management and proves the business model.
Analyzing the growth reveals not only performance of the company over time, but also allows us to compare the company against the competition, market trends and industry averages.
The most popular indicators of this king include annual growth rate and cumulative average growth rate CAGR.