10 Crucial Investing Ratios

1️⃣ Gross margin (GM)

🎯 What?
Company's gross profit compared to its revenue

💡 Formula?
Sales - COGS / Sales

2️⃣ EBIT Margin

🎯What?
What percentage of sales remains as profit before tax and interest

💡 Formula?
EBIT / Sales

3️⃣ Debt-to-Assets

🎯What?
The total amount of debt a company has relative to its assets

💡 Formula?
Debt / Assets

4️⃣ Debt-to-Equity

🎯What?
Ratio used to calculate a company's financial leverage

💡Formula?
Debt / Equity

5️⃣ CAPEX/Sales

🎯What?
Measures the capital intensity of a company

💡 Formula?
Capital Expenditures / Sales

6️⃣ Return On Equity (ROE)

🎯What?
Indicates how profitable a company is in relation to its equity

💡 Formula?
Net Income / Equity

7️⃣ Return On Invested Capital (ROIC)

🎯What?
Shows you how efficiently a company is allocating capital

💡 Formula?
NOPAT / Total Inv. Capital

8️⃣ Earnings Per Share (EPS)

🎯What?
How much money a company makes for each share outstanding

💡 Formula?
Net Income / Shares Outstanding

9️⃣ Free Cash Flow Realization

🎯What?
Measures how much earnings are translated into free cash flow

💡 Formula?
Free Cash Flow / Net Income

🔟 Price-to-Earnings Ratio (P/E)

🎯What?
Ratio that compares a company's share price to its earnings per share

💡Formula?
Price Per Share / Earnings Per Share