Is learning Financial Modelling one of the most valuable first steps in stock valuation?

Financial Modelling is a process that recreates a hypothetical forecasted scenario of a company’s future operations and financials. Financial modelling uses past data and creates a summary of the company’s likely projected expenses and earnings that can guide investment decisions. Modelling is most used in corporate finance and includes using various models such as the… Continue reading →

What is the EPS and how to use it?

Earnings Per Share (EPS) is an important financial metric that determines how much of a company’s accounting profit is allocated to each common share outstanding. The earnings of a company is one of the most significant variables in shaping a stock price. The EPS in used in other key financial and valuation ratios.

The Earnings Per Share explained. Earnings Per Share (EPS) is an important financial metric that determines how much of a company’s accounting profit is allocated to each common share outstanding. The earnings of a company is one of the most significant variables in shaping a stock price. The EPS in used in other key financial… Continue reading →

What is the ROC ratio and how to use it?

The Return on Capital (ROC) is a “profitability ratio” used to measure the efficiency in which a business allocates its capital to generate profits. Return on capital is one of the best ratio’s that investors can use to determine whether a business will make a viable investment opportunity. The capital return ratio shows how much operating income (EBIT) is generated for every dollar invested in capital.There are two types of capital return ratios: ROCE (Return on Capital Employed) and ROIC (Return on Invested Capital). Both are used when valuing the capital returns on a business and each have a place which we will explore further below.

The Return on Capital ratio explained. The Return on Capital (ROC) is a “profitability ratio” used to measure the efficiency in which a business allocates its capital to generate profits. Return on capital is one of the best ratio’s that investors can use to determine whether a business will make a viable investment opportunity. The… Continue reading →