Every number on these pages in plain English: what it means, how it is worked out, and which way is better. Elsewhere, a dotted label or an ⓘ opens the same explanation.
What a company is worth, and what the market pays for its sales, profit and cash.
The price of every share added up: what the stock market says the company is worth.
Share price×Shares=Market capWhat it would cost to buy the whole business: the shares, plus the debt you would take on, minus the cash you would get.
Market cap+Debt − cash=EVHow many years of revenue the whole business costs. At 5x, the company is valued at five times what it sells in a year.
EV÷Revenue, 12 months=EV/SalesLike EV/Sales, but against the profit left after the direct cost of what was sold. Fairer when margins differ a lot.
EV÷Gross profit=EV/Gross profitMarket cap divided by a year of revenue. EV/Sales is the same idea, adjusted for debt and cash.
Market cap÷Revenue, 12 months=P/SThe share price divided by a year of profit per share: how many years of today's profit you pay for.
Market cap÷Net income, 12 months=P/EShare price÷EPS=P/EFree cash flow as a percent of market cap: the cash the business makes for each dollar of stock.
Free cash flow÷Market cap=FCF yieldEV/Sales divided by the revenue growth rate, so a fast grower's high multiple is put in context.
EV/Sales÷Growth %=Growth-adjustedA year of profit as a percent of market cap: P/E turned upside down, so it can sit next to a bond yield.
Net income, 12 months÷Market cap=Earnings yieldMarket cap divided by shareholders' equity: what investors pay for each dollar the balance sheet says the owners have.
Market cap÷Equity (book value)=P/BMarket cap divided by a year of gross profit. Like P/S, but against what is left after the direct cost of sales.
Market cap÷Gross profit=P/Gross profitMarket cap divided by a year of operating cash flow: what you pay for the cash the business brings in before capital spending.
Market cap÷Operating cash flow=P/OCFMarket cap divided by a year of free cash flow: FCF yield turned upside down.
Market cap÷Free cash flow=P/FCFEnterprise value divided by EBITDA: a common way to price a whole business before interest, tax and the cost of wearing out its assets.
EV÷EBITDA=EV/EBITDAP/E divided by the earnings growth rate, so a fast grower's higher P/E is put in context. Here growth is five years of diluted EPS growth.
P/E÷EPS growth %=PEGHow a company's EV/Sales compares with what its peers pay for the same growth and cash margin. Below means cheaper than companies like it.
EV/Sales÷Peer-implied EV/Sales− 1 =vs peersHow fast the business grows and how much cash it turns out.
Everything the company sold over its last four reported quarters. A full year smooths out the seasons.
Q1+Q2+Q3+Q4=12-month revenueHow much more the company sold over the last 12 months than in the 12 months before.
Last 12 months÷Year before− 1 =GrowthCash the day-to-day business actually brought in after paying suppliers, staff and taxes. Unlike profit, it is hard to dress up.
Net income+Non-cash costs±Working capital=Operating cash flowCash spent on long-lived things such as buildings, machines and data centers, to keep the business running and growing.
Capex÷Revenue=Capex / revenueCash left after running the business and paying for its upkeep and growth: what could go to owners, debt or acquisitions.
Operating cash flow−Capex=Free cash flowFree cash flow as a share of revenue: how many cents of cash each dollar of sales leaves.
Free cash flow÷Revenue=FCF marginGrowth % plus FCF margin %. A software rule of thumb: a healthy company scores 40 or more, by growing fast, by making lots of cash, or both.
Growth %+FCF margin %=Rule of 40How much of each dollar of revenue becomes profit, and what the business earns on its capital.
Share of revenue left after the direct cost of what was sold. High for software, low for retailers and manufacturers.
Gross profit÷Revenue=Gross marginShare of revenue left after all running costs (staff, research, marketing), before interest and tax.
Operating income÷Revenue=Operating marginShare of revenue left as profit after everything, including interest, tax and one-offs.
Net income÷Revenue=Net marginA year's profit divided by the owners' stake in the business: how hard shareholders' money is working.
Net income÷Average equity=ROEProfit divided by everything the company owns: how much it earns on its total resources, however they were paid for.
Net income÷Average assets=ROADebt, cash and whether the bills can be paid.
Borrowings minus cash. Negative means the company holds more cash than debt.
Debt−Cash=Net debtBorrowings for every dollar the owners have in the business. Higher means more leverage, and bigger swings both ways.
Debt÷Equity=Debt/equityWhat the company will turn into cash within a year, divided by what it must pay within a year.
Current assets÷Current liabilities=Current ratioOperating profit divided by interest: how many times over the company could pay its interest bill.
Operating income÷Interest expense=CoverageProfit per share and the cash handed back to owners.
Profit divided by the number of shares. Diluted EPS also counts options and convertible shares that could become stock.
Net income÷Shares=EPSA year of cash dividends as a percent of the share price.
Dividends per share÷Share price=Dividend yieldShare of profit paid out as dividends.
Dividends÷Net income=Payout ratioDividends plus buybacks as a percent of market cap: all the cash returned to owners.
Dividends+Buybacks=Cash returnedCash returned÷Market cap=Shareholder yieldHow a company stacks up against companies like it.
What the stock itself has done.
Every line of the income statement, balance sheet and cash flow statement, as the filings report it.