Accrual ratio
AccountingNet profit minus operating cash flow, divided by average total assets.
In plain terms
Sustained above about 10% deserves an explanation. The multi-year trend matters far more than any single year.
1678 terms
Glossary
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 4 terms
Read the full lesson →
Book value
AccountingAlso called: Net worth, Shareholders’ equity
Total assets minus total liabilities — the accounting net worth attributable to shareholders.
In plain terms
Meaningful for banks, nearly useless for a software company.
Equity multiplier
Fundamental analysisAverage total assets divided by average net worth — how many rupees of assets each rupee of owners’ money carries.
In plain terms
The second term in return on equity. It magnifies a bad year by exactly the factor it magnifies a good one, which is why two lenders with the same headline return are not the same investment.
ROA
Fundamental analysisAlso called: Return on assets
Return on assets — net profit as a percentage of total assets.
In plain terms
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.