Insights archive

Free Cash Flow Margin

Free Cash Flow Margin: Why It Matters and How to Calculate It

Free cash flow margin is a crucial financial ratio that measures a company's ability to generate cash from its operations after accounting for capital expenditures. It evaluates the percentage of free cash flow relative to total revenue, providing insights into the company's financial health and cash generation efficiency.

Discounted Cash Flow Analysis - How to value a business?

A Step-by-Step Guide to Discounted Cash Flow Analysis

This article focuses on the concept of discounted cash flow, its relationship to net present value (NPV), the significance of the weighted average cost of capital (WACC), and provides an example of a discounted cash flow analysis.

Current Ratio

Current Ratio: Understanding Its Significance and Interpretation

The current ratio is a fundamental financial metric that assesses a company's ability to meet its short-term financial obligations. It is a valuable indicator of liquidity and helps stakeholders evaluate a company's financial health.

Year on Year - YoY - Y/Y

Year-over-Year (YOY): Meaning, Formula, and Application

Year-over-Year (YOY) is a widely used term in financial analysis that compares the performance of a specific financial ratio or variable over consecutive periods, typically year to year. It provides valuable insights into the growth or decline of a particular measure, allowing businesses and analysts to assess trends and identify patterns.

David Barber: Delivering Shareholder Value

Business Philosophy

David Barber: Delivering Shareholder Value

Recapping David Barber's speech, co-founder of Halma, from 1997 describing the secret of the group’s success as a combination of strategic long-term vision and steady purpose.

Market Value  Ratios

Market Value Ratios: Understanding Their Significance and Calculation

Market value ratios are crucial financial metrics used by investors, analysts, and businesses to assess the valuation and market perception of a company. These ratios provide insights into how the market values a company's stock and its growth potential.

Quick Ratio

Quick Ratio: A Crucial Indicator for Financial Health

Financial analysis is riddled with numerous financial ratios, each serving a unique purpose. One of the most important among them is the quick ratio. In this article, we will discuss what a quick ratio tells you, evaluate if a quick ratio of 2 is good, explore what a 2 to 1 quick ratio means, and ascertain what constitutes a good or bad quick ratio.

Debt Ratio

Debt Ratio: Understanding and Evaluating Financial Health

When assessing the financial health of a company or an individual, one crucial financial metric to consider is the debt ratio. The debt ratio, also known as the debt-to-assets ratio, provides valuable insights into the proportion of debt a business has in relation to its total assets.

Intrinsic Value - What is a company worth?

Intrinsic Value: The True Worth of a Company

In the world of finance and investing, understanding the concept of intrinsic value is essential. Intrinsic value represents the underlying fundamental worth of an asset or a company, regardless of its current market price.

Profitability Ratios

Profitability Ratios: Assessing Financial Performance

This article explains what profitability ratios are, their importance, how to measure profitability, and arguably the five most important ratios in financial analysis.

Operating Cash  Flow Margin

Operating Cash Flow Margin: Meaning, Formula, and Analysis

Operating cash flow margin is a key financial ratio that measures a company's ability to generate cash from its core operations. It assesses the percentage of operating cash flow relative to total revenue, providing insights into the company's cash generation efficiency.

Fundamental analysis - a commonly used method when picking stocks

Fundamental Analysis: Understanding the Basics

In the world of financial markets, investors employ various techniques and valuation methods to make rational and informed decisions. Fundamental analysis is one such approach that focuses on evaluating the intrinsic value of a security, such as stocks, bonds, or commodities.

Efficiency Ratio

Efficiency Ratio: Assessing Operational Effectiveness

One key metric used for this purpose is the efficiency ratio. The efficiency ratio provides insights into how efficiently a company utilizes its resources to generate revenue and control costs. In this article, we will explore the efficiency ratio, its formula, three common efficiency ratios, and what constitutes a good capital efficiency ratio.

Leverage Ratio

Leverage Ratio: Understanding Financial Risk and Health

One key aspect of financial analysis is assessing a company's leverage ratio, which provides insights into its debt levels and the potential risks associated with them. This article delves into what a leverage ratio is, its formula, what constitutes a good leverage ratio, and the implications of specific leverage ratios.

Liquidity Ratio

Liquidity Ratio: Understanding and Analyzing Financial Stability

In this article, we will delve into the essence of the Liquidity Ratio and answer crucial questions like what a good current liquidity ratio is, how you calculate it, what it signifies if it’s less than 1, and which the most common liquidity ratios are.

Business Valuation - Trying to determine the value of a company

Business Valuation: Determine a Company's True Value

Determining the value of a business is a crucial step in various scenarios, whether you're considering buying or selling a company, seeking investment opportunities, or planning for the future. Business valuation provides insights into the financial worth of a business and serves as a foundation for informed decision-making. In this article, we will explore different methods to value a business and shed light on key considerations when assessing its value.

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