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Financial Analysis

Financial Statements

Working Capital Turnover: Formula, Calculation, and Interpretation

By Ahmad Nasrudin · Updated on April 17, 2022

Working Capital Turnover Formula Calculation and Interpretation

What's it: Working capital turnover is a financial ratio to measure how efficiently companies use their working capital to generate revenue. We calculate it by dividing revenue by the average working capital. A higher ratio indicates

Tags: Activity Ratio, Financial Analysis, Financial Ratio, Working Capital

Financial Statements

Inventory Turnover Ratio: Formula, Calculation and How to Read It

By Ahmad Nasrudin · Updated on April 17, 2022

What's it: Inventory turnover ratio is a financial ratio to show the number of times companies convert their inventory into sales during a given period. It is useful for evaluating management effectiveness in managing inventory. The

Tags: Activity Ratio, Financial Analysis, Financial Ratio, Inventory, Inventory Turnover, Inventory Turnover Ratio

Financial Statements

Solvency Ratio: Formulas, Examples, and Calculations

By Ahmad Nasrudin · Updated on April 17, 2022

What's it: The solvency ratio is a financial ratio to measure a company's ability to meet its long-term obligations. To calculate it, we divide the debt relative to the firm's capital or assets. Or, we compare a company's ability to generate

Tags: Financial Analysis, Financial Ratio, Solvency Ratio

Financial Statements

EBIT Margin: Calculation and Interpretation

By Ahmad Nasrudin · Updated on April 17, 2022

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

Tags: EBIT, Financial Analysis, Financial Ratio, Profitability Margin, Profitability Ratio

Financial Statements

NOPAT Margin: Formula, Calculation, and Interpretation

By Ahmad Nasrudin · Updated on April 17, 2022

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

Tags: Financial Analysis, Financial Ratio, NOPAT, Profitability Margin, Profitability Ratio

Financial Statements

EBIAT Margin: Formula, Calculation, and Interpretation

By Ahmad Nasrudin · Updated on April 17, 2022

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

Tags: EBIAT, Financial Analysis, Financial Ratio, Profitability Margin, Profitability Ratio

Financial Statements

Return on Common Equity (ROCE): Calculation and Interpretation

By Ahmad Nasrudin · Updated on April 17, 2022

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

Tags: Common Equity, Financial Analysis, Financial Ratio, Profitability Margin, Profitability Ratio, ROE, Shareholder

Financial Statements

Operating ROA: Formula, Calculation, and Interpretation

By Ahmad Nasrudin · Updated on April 17, 2022

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

Tags: Assets, Common Equity, Financial Analysis, Financial Ratio, Profitability Margin, Profitability Ratio, ROA

Financial Statements

Cost of goods manufactured: Meaning, Components, How to Calculate

By Ahmad Nasrudin · Updated on December 18, 2020

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

Tags: Expenses, Financial Analysis

Finance

Deferred Tax Assets: Meaning, Examples

By Ahmad Nasrudin · Updated on August 28, 2020

What's it: A deferred tax asset represents an inflow of future tax-related economic benefits. It eventually returns to business in the form of tax relief, reducing future taxable income. For example, a company pays taxes early before they are

Tags: Financial Analysis

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