Insolvency – Detection
Insolvency refers to the ability to pay bills in a timely manner. It does not mean bankruptcy but long-term insolvency is a underlying factor of bankruptcy.
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Value Investing
Value investing, in its simplest terms, means buy low, sell high, the universal primary tenet of business. Value investing is defined as a systematic process of purchasing high-quality stocks at an undervalued market price, quantified by intrinsic value and justified through financial analysis, then selling the stock promptly upon market price recovery.
This site teaches the investor about the four core principles of value investing. There are various in-depth sections, including tutorials about intrinsic value and security analysis.
Furthermore, there is a membership-only section that utilizes a Value Investment Fund with eight pools of different industries and 60-plus potential investments that are monitored regularly. This Fund has a six-year history of 25% annualized returns.
Return on Equity
Another performance ratio used in business is return on equity. It is similar to return on assets except return on equity uses one section of the bottom half of the balance sheet.
Operating Cash Ratio – Formula and Understanding
Unlike the other liquidity ratios that are balance sheet derived, the operating cash ratio is more closely connected to activity (income statement).
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Operating Profit Margin – Formula and Understanding
Operating profit margin refers to the value earned as a percentage of net sales. The operating profit is often referred to as earnings before interest, taxes, depreciation and amortization, (EBITDA).
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Total Assets Turnover Rate – Formula and Analysis
Within the group of activity ratios, the total assets turnover rate is the broadest in scope. Similar to other activity ratios, it utilizes net sales as the numerator.
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Fixed Assets Turnover Rate
The fixed assets turnover rate is another activity ratio whereby an income statement financial characteristic is compared to a balance sheet asset section.
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Working Capital Turnover
Activity ratios measure performance of a current asset on the balance sheet. The working capital turnover is the most encompassing of all the activity ratios.
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Cash Ratio
The cash ratio is a much more effective tool for small business than the traditional current or quick ratio.
Accounts Receivable Turnover Ratio
One of the activity ratios in business is the receivables turnover ratio or rate; it measures the frequency of collecting the entire balance of accounts receivable.
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