Every term is defined twice: once the way a filing would put it, and once the way somebody would explain it to you across a table. The second one is usually the one that sticks.
Showing 8 terms
The bottom line of the income statement — what remains for shareholders after all costs, interest, tax and exceptional items.
Check what is inside it before applying any multiple. A one-off gain from selling a factory spends once and inflates the figure for exactly one year.
Net profit minus operating cash flow, divided by average total assets.
Sustained above about 10% deserves an explanation. The multi-year trend matters far more than any single year.
Earnings per share — net profit divided by shares outstanding.
Can rise from buybacks alone. Always check net profit rose too.
Gains and losses that Ind AS routes directly into reserves, presented below net profit and excluded from earnings per share.
The half of the year earnings per share never sees. It still lands in equity, so return on equity can improve on an entirely unchanged business simply because a large OCI loss shrank the denominator.
Return on assets — net profit as a percentage of total assets.
Unlike ROE it cannot be lifted by swapping equity for debt, because the borrowed money still sits in the asset base. Most informative for banks and lenders, where the assets are the business.
Return on equity — net profit as a percentage of shareholders’ equity.
Can be inflated simply by borrowing more. Always decompose it before admiring it.
Net profit plus other comprehensive income — the final line of the statement of profit and loss.
The number that actually reconciles to the change in equity. If it sits close to net profit, nothing here needs your attention; if the two diverge by hundreds of crore, the profit line is half the year.
Cash generated by the core business, after working-capital movements.
Compare five years of this against five years of net profit. Divergence is the red flag.