AAKASHAYA PATRA SEVEN STAR SMART EDUCATION SERIES PART – 61 : 10.10.2020

*AAKASHAYA PATRA SEVEN STAR SMART EDUCATION SERIES PART – 42 :* 26.04.2020

IMPORTANT RATIOS AND THEIR DEFINATION

Key Indicator ( Value Investor )	Formula	Defination
CMP ( Rs )	Current Market price of Stock	Current Market price of Stock
P/E ( Price to Earning )	The P/E ratio can be calculated as: Market Value per Share / Earnings per Share	The price-earnings ratio (P/E ratio) is the ratio for valuing a company that measures its current share price relative to its per-share earnings
Market Capitalization ( Rs. Cr. )	MC = Nos of Equity *Current Market Price	It is calculated by multiplying the current market price of the company's share with the total outstanding shares of the company.
Dividend yield ( % )	Dividend Yield = Annual Dividend / Current Stock Price	The dividend yield or dividend-price ratio of a share is the dividend per share, divided by the price per share
EPS ( Rs )	EPS = (Net Income - Dividends on Preferred Stock) / Average Outstanding Shares	Earnings per share (EPS) is the portion of a company's profit allocated to each outstanding share of common stock. Earnings per share serves as an indicator of a company's profitability
Debt ( Rs. Cr. )		Debt is an amount of money borrowed by one party from another. Debt is used by many corporations and individuals as a method of making large purchases that they could not afford under normal circumstances. A debt arrangement gives the borrowing party permission to borrow money under the condition that it is to be paid back at a later date, usually with interest
Book value / share ( Rs )	Book value = total assets - intangible assets - liabilities	Book value of an asset is the value at which the asset is carried on a balance sheet and calculated by taking the cost of an asset minus the accumulated depreciation. Book value is also the net asset value of a company, calculated as total assets minus intangible assets (patents, goodwill) and liabilities. For the initial outlay of an investment, book value may be net or gross of expenses such as trading costs, sales taxes, service charges and so on.
OPM ( % )	OPM=Operating Income/Net Sales	Operating margin is a measurement of what proportion of a company's revenue is left over after paying for variable costs of production such as wages, raw materials, etc. It can be calculated by dividing a company’s operating income (also known as "operating profit") during a given period by its net sales during the same period. “Operating income” here refers to the profit that a company retains after removing operating expenses (such as cost of goods sold and wages) and depreciation. “Net sales” here refers to the total value of sales minus the value of returned goods, allowances for damaged and missing goods, and discount sales.
Sales ( Rs. Cr. )
Number of equity shares ( Cr. )
Instinct  Value or Graham Magic Formula  ( Rs. )	IV =EPSx(8.5 +2g)x7.9/Y   -  Where  8.5 is  P/E ratio assumption  , g is future EPS growth rate ,  Y is 10 years Indian Govt. Bond yield
Intrinsic Value ( Rs. )	Intrinsic Value =16 *PEG*EPS	"Intrinsic value can be defined simply: It is the discounted value of the cash that can be taken out of a business during its remaining life." - Warren Buffett
Graham's Number ( Rs. )	GN = Square Root (22.5 x EPS x BVPS) - 22.5 is max 15 PE and 1.5 P/B criteria , BVPS is Book value per share	The Graham number is a figure that measures a stock's fundamental value by taking into account the company's earnings per share and book value per share. The Graham number is the upper bound of the price range that a defensive investor should pay for the stock. According to the theory, any stock price below the Graham number is considered undervalued and thus worth investing in , Graham number is the formula Ben Graham used to calculate the maximum price one should pay for a stock: square root of (22.5 * EPS * BV)
PEG Ratio	PEG ratio = P/E ratio / earnings growth rate	The price/earnings to growth ratio (PEG ratio) is a stock's price-to-earnings (P/E) ratio divided by the growth rate of its earnings for a specified time period. The PEG ratio is used to determine a stock's value while taking the company's earnings growth into account, and is considered to provide a more complete picture than the P/E ratio.
Face value		The face value of a share of stock is known as its par value, which is the legal capital of each share of stock
Equity capital ( Rs. Cr. )	EC = Face Value *nos of Equity share	The amount of capital raise during listing of the company
Interest coverage Ratio - ICR	ICR = EBIT ( Earning before interest & Taxes )/Interest Expense	The interest coverage ratio is a financial ratio that measures a company’s ability to make interest payments on its debt in a timely manner
Return on capital employed ( % ) ROCE	ROCE = Earnings Before Interest and Tax (EBIT) / Capital Employed	Return on capital employed (ROCE) is a financial ratio that measures a company's profitability and the efficiency with which its capital is employed
Promoter holding ( % )	% of share hold by Promoter	% of share hold by Promoter
Debt to equity Ratio	Debt to equity Ratio = Total Liabilities /Total Equity	The debt to equity ratio is a financial, liquidity ratio that compares a company’s total debt to total equity. The debt to equity ratio shows the percentage of company financing that comes from creditors and investors. A higher debt to equity ratio indicates that more creditor financing (bank loans) is used than investor financing (shareholders).
Price to book value-  P/B	P/B = Market price per share / Book Value per share	The price to book ratio, also called the P/B or market to book ratio, is a financial valuation tool used to evaluate whether the stock a company is over or undervalued by comparing the price of all outstanding shares with the net assets of the company. In other words, it’s a calculation that measures the difference between the book value and the total share price of the company.
Price to Free Cash Flow -  P/FCF	Price to Free Cash Flow = Market Capitalization / Free Cash Flow	The price-to-free cash flow ratio (P/FCF) is a valuation method used to compare a company’s current share price to its per-share free cash flow.
Enterprise Value ( Rs. ) - EV	EV = Market Capitalization +Debt- Current Cash	Enterprise value, also called firm value, is a business valuation calculation that measures the worth of a company by comparing its stock price, outstanding debt, and cash and equivalents in the event of a company sale. In other words, it’s a way to measure how much a purchasing company should pay to buy out another company
Enterprise Value to EBIT ( Rs. )	EV/EBITDA Ratio = EV / EBITDA	The EV/EBITDA ratio is a comparison of enterprise value and earnings before interest, taxes, depreciation and amortization. This is a very commonly used metric for estimating the business valuations. It compares the value of a company, inclusive of debt and other liabilities, to the actual cash earnings exclusive of the non-cash expenses
Current ratio	Current Ratio = Current asset / Current liabilities	The current ratio is a liquidity and efficiency ratio that measures a firm’s ability to pay off its short-term liabilities with its current assets. The current ratio is an important measure of liquidity because short-term liabilities are due within the next year.
Quick Ratio or ACID TEST	QR = cash + cash equivalents + short-term investments  +and current receivables /current liabilities	The quick ratio or acid test ratio is a liquidity ratio that measures the ability of a company to pay its current liabilities when they come due with only quick assets. Quick assets are current assets that can be converted to cash within 90 days or in the short-term. Cash, cash equivalents, short-term investments or marketable securities, and current accounts receivable are considered quick assets.
CROIC ( % )	CROIC = FCF/Invested Capital    ( Invested Capital = Shareholders Equity + Interest Bearing Debt + Short Term Debt + Long Term Debt  )	Cash Return On Invested Capital - Cash Return or Owner earnings before tax on the invested capital. This considers only the operating profit and only the capital invested in net block and working capital. This shows how the actual business is performing  , CROIC focuses on the returns made with FCF instead of net income
Price to Sales	Price / Sales	Cyclical companies - An increased P/S can warn the investor of overvaluation while a decreasing number may point to a recovery. Growth companies experiencing temporary setback -  Growth stocks are notoriously tough to value since earnings are often spotty at best. Turnarounds -With turnarounds earnings are almost never present, hence the name. However, as is the case with cyclical companies, a decreasing P/S ratio may indicate a rally is near
Price to Free Cash Flow	Market Cap / Free Cash Flow	This is the share price of the company divided by the free cash flow. Free cashflow is the operating cashflow minus capital expenditures. Free Cashflow is the amount left over a company can use to pay down debt, distribute as dividends, or reinvest to grow the business
Inventory turnover ratio	Inventory Turnover = Sales/Inventory	The inventory turnover ratio measures how quickly the company sells its inventory.The goal is to quickly turn inventory into cash, then reinvest the cash back into inventory, and then turn it to cash again for even more profits.The more your company does this in a single year, the higher the efficiency and profitability
Days Receivable Outstanding - DSO	DSO = (Accounts Receivable/Net Credit Sales or Revenue ) X 365	The days sales outstanding calculation, also called the average collection period or days’ sales in receivables, measures the number of days it takes a company to collect cash from its credit sales. This calculation shows the liquidity and efficiency of a company’s collections department. In other words, it shows how well a company can collect cash from its customers. The sooner cash can be collected, the sooner this cash can be used for other operations. Both liquidity and cash flows increase with a lower days sales outstanding measurement.Number of days after which the payment is usually realised by the debtors
Debtor days	DD = (Trade Debtors / Sales )X 365	total number days in which a debtor needs to pay his bills. The factors trade debtors, revenue in sales and total number of days in a financial year are governing this calculation of debtor days. The average time taken by customers to pay their bills varies from industry to industry, although it is a common complaint that trade debtors take too long to pay in nearly every market. Average trade receivables by sales per day as per the latest annual report.
Days Payable Outstanding	DPO = (average accounts payable / cost of goods sold) x 365 days	Turnover ratio that represents the average number of days it takes for a company to pay its suppliers. A high (low) DPO indicates that a company is paying its suppliers slower (faster). A DPO of 17 means that on average, it takes the company 17 days to pays its suppliers
Days Inventory Outstanding	DIO = (Average inventory / Cost of sales) x 365	is an efficiency ratio that measures the average number of days the company holds its inventory before selling it. The days sales in inventory is a key component in a company’s inventory management. Inventory is a expensive for a company to keep, maintain, and store. Companies also have to be worried about protecting inventory from theft and obsolescence.
Cash Conversion Cycle	Cash Conversion Cycle = Days Inventory Outstanding + Days Sales Outstanding – Days Payables Outstanding	The cash conversion cycle gives you insight into how efficiently the business manages its cash. Every company’s goal is to turn cash over quickly and the entire cash conversion cycle is a measure of management effectiveness.
Working Cap ( Rs. Cr. )	Working capital = current assets – current liabilities	The working capital formula tells us the short-term, liquid assets remaining after short-term liabilities have been paid off.  It is a measure of a company’s short-term liquidity and important for performing financial analysis, financial modeling, and managing cash flow.Working capital is the difference between a company’s current assets and current liabilities. It is a financial measure, which calculates whether a company has enough liquid assets to pay its bills that will be due in a year. When a company has excess current assets, that amount can then be used to spend on its day-to-day operations
Altman Z Score	Z = 1.2 X1 + 1.4 X2 + 3.3 X3 + 0.6 X4 +1 X5 (  X1 = Working Capital / Total Assets , X2 = Retained Earnings / Total Assets , X3 = EBITDA / Total Assets , X4 = Market Value of Equity / Total Liabilities ,  X5 = Net Sales / Total Assets )	The Altman Z-score is the output of a credit-strength test that gauges a publicly traded manufacturing company's likelihood of bankruptcy. The Altman Z-score is based on five financial ratios that can be calculated from data found on a company's annual
G Factor	GFactorFormula=(NF∗RRF)–(CF∗TF)  -  TF : Trap Factor , RRF : Risk Return Factor , CF = Complexity Factor , NF = Need Factor	A Growth factor developed by Dalal-Street Team. Maximum score is 10 and minimum is 0. Higher, more are the prospects of growth
Accumulated depreciation ( Rs. Cr. )		Accumulated Depreciation is also the title of the contra asset account which is credited when Depreciation Expense is recorded each accounting period. The amount of accumulated depreciation is used to determine a plant asset's book value (or carrying value) , Accumulated depreciation is the total sum of depreciation expense recorded for an asset. In other words, it’s the amount of costs the asset has been allocated thus far in its useful life.

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