What's it: Days payable outstanding (DPO) is a financial ratio showing how many days on average it takes a company to pay its suppliers. We calculate it by dividing the number of days in a year by the accounts payable turnover
Financial Statement Analysis
Accounts Payable Turnover Ratio: How To Calculate And Read It
What's it: The accounts payable turnover ratio is a financial ratio showing the number of times a company pays its suppliers over a year or accounting period. It measures the company's effectiveness in managing accounts
Days of Inventory on Hand: Formula and How to Calculate
What's it: Days of inventory on hand (DOH) is a financial ratio showing how many days on average a company converts its inventory into sales. It is inversely related to the inventory turnover ratio.A lower DOH is preferable because
Accounts Receivable Turnover: Formula, Calculation, How to Read It
What's it: Accounts receivable turnover is a financial ratio showing the number of times a business converts accounts receivable into cash. Since accounts receivable represent a potential source of cash inflows for the company, a low ratio can
EBIT Margin: Calculation and Interpretation
What's it: EBIT margin is a profitability ratio to measure how efficiently a company converts its revenue into profit before paying interest and taxes. We calculate it by dividing EBIT by revenue. A high ratio is better because the
NOPAT Margin: Formula, Calculation, and Interpretation
What's it: NOPAT margin is a profitability ratio to measure how efficiently a company generates profit from its core business after accounting for expenses paid as taxes. We calculate it by dividing NOPAT by revenue. We use it as an
Return on Assets (ROA): Calculation and Interpretation
What's it: Return on assets (ROA) is a profitability ratio to measure how well a company uses its assets to generate profits. This ratio tells us about the returns the company gets on its assets. We calculate it by dividing net profit
EBIAT Margin: Formula, Calculation, and Interpretation
What's it: EBIAT margin is a profitability ratio to measure how efficiently a company generates profit from all its activities before paying interest expense while taking taxes into account. We calculate it by dividing EBIAT by
Return on Common Equity (ROCE): Calculation and Interpretation
What's it: Return on common equity (ROCE) is a profitability ratio for measuring the return to common stockholders on their invested capital. It is an alternative to return on equity (ROE) by isolating returns to preferred
Operating ROA: Formula, Calculation, and Interpretation
What's it: Operating ROA is a profitability ratio to measure how well a company is using its assets to generate profits from its core business. We calculate it by dividing operating profit by total assets.Operating ROA provides
Cost of goods manufactured: Meaning, Components, How to Calculate
What's it: Cost of goods manufactured refers to the collection of production cost plus the change in work-in-process inventory. These production costs (or manufacturing costs) consist of direct material costs, direct labor, and factory overhead
Gearing: Meaning, How to Calculate, Pros and Cons
What's: Gearing shows you how much a company depends on debt in its capital structure. It's a term in the UK and the same as leverage for the term in the United States.The company's capital structure is divided into two sources: debt and