Essential financial and investment terminology for markets, accounting, and personal finance.
The cash conversion cycle (CCC) is the number of days between paying suppliers and collecting from customers. It equals days inventory outstanding plus days sales outstanding minus days payables outstanding.
Dividend yield expresses the annual dividend per share as a percentage of the current share price, indicating the cash income return from dividends relative to price.
Earnings Per Share (EPS) is the portion of a company's net profit allocated to each outstanding share of common stock, widely used to gauge profitability on a per-share basis.
The interest coverage ratio measures how many times a company's earnings can cover its interest expense, indicating its ability to service debt from operating profits.
Operating expenditure (OpEx) is the ongoing cost of running a business — salaries, rent, utilities, marketing, software subscriptions, repairs — recorded as an expense in the period it is incurred. Capital expenditure (CapEx) is money spent on long-lived assets such as machinery or buildings, recorded on the balance sheet and expensed gradually through depreciation.
The Price-to-Earnings (P/E) ratio compares a company's share price to its earnings per share, expressing how much investors pay for each unit of earnings.
The quick ratio, or acid-test ratio, is a strict liquidity measure that compares a company's most liquid current assets (excluding inventory) against its current liabilities.
Return on assets (ROA) is a company's net income divided by its average total assets. It shows how much profit each dollar of assets produces, however those assets were financed.
Return on equity (ROE) is net income divided by average shareholders' equity. It shows how much profit a company earned on the money its owners have in the business.