AVVH

Capital-structure-agnostic valuation multiple. Useful for comparing levered companies because it adds debt and removes cash from the numerator and uses pre-interest, pre-tax, pre-depreciation earnings in the denominator.

Valuation expressed against the cash actually available to all capital providers. Often more honest than EV/EBITDA when capex is meaningful relative to D&A.

Adjusts the numerator for debt and cash so heavily-levered or cash-rich companies are comparable. Particularly useful for cross-industry valuation work.

How many dollars of book equity each share represents. Useful for asset-heavy businesses (banks, industrials) where book value approximates liquidation floor; less informative for asset-light franchises whose value is in intangibles.

Multiple of trailing-twelve-month earnings the market has assigned to the company. Lower means cheaper relative to current earnings power, but a single low P/E can also mean the market expects earnings to fall.

Useful when earnings are negative or noisy (early-stage companies, restructurings). Works best within an industry because gross margin profiles vary wildly.

Divides P/E by the annualized EPS growth rate (in percent points). Below 1.0 is conventionally read as 'cheap relative to growth.' Sensitive to which growth window you use; can flip sign if earnings are negative.

Productivity of the asset base. Combined with net margin, this is the DuPont decomposition of ROA: ROA = net_margin * asset_turnover.

Sanity-check on earnings quality. Persistently below 1 means working capital or capex is consuming earnings; persistently above 1 is unusual and may flag accounting conservatism or non-cash drags.

End-to-end conversion ratio: of every dollar of revenue, how much falls through to genuine free cash flow available to capital providers? More honest than net margin because it accounts for capex needed to maintain the business.

FCF the business throws off relative to what you pay for the equity. Treats the equity as a perpetual claim on cash. Cyclicals can swing below zero in a downturn.

First-line profitability measure - how much revenue is left after the direct cost of producing it. Stable gross margin suggests pricing power and low input-cost exposure.

Operating margin minus interest, tax, and below-the-line items. Useful but noisy because tax rate and debt service distort year-to-year comparability.

Pre-capex version of cash conversion. Numbers persistently below 1 suggest accruals are doing the work; numbers persistently above 1 are a (mild) positive sign.

Captures the leverage between revenue and operating profit. Core test of whether a business converts sales into income at the operating level.

Capital-efficiency measure that ignores how the assets are financed. Useful for comparing within a sector but biased low for asset-heavy businesses (banks, utilities) and high for asset-light ones.

Headline profitability metric. High ROE compounds book value if the business can reinvest at the same return. Beware of buybacks artificially inflating ROE by shrinking the denominator.

Measures how productive the actual operating capital base is, independent of capital structure. The benchmark is the company's cost of capital - sustained ROIC above WACC creates value, below WACC destroys it.

Strips out receivables and inventory, leaving only cash and equivalents over current liabilities. Stress-tests whether the business can meet obligations even if collections seize up.

Whether the company can cover near-term obligations from near-term assets. Below 1.0 doesn't mean insolvent (cash flow can cover the gap) but is worth a closer look.

How much the company funds itself with debt vs. equity. Higher leverage amplifies both returns and risks; the appropriate level varies wildly by industry.

Strips out short-term operating debt and revolver use to focus on permanent capital structure. Useful when comparing companies that fund working capital differently.

Direct income from holding the share. Stable dividend yield often signals capital discipline; abnormally high yield can be a warning that the dividend isn't covered by FCF and may be cut.

Lets you compare equity earning power directly to bond yields. A 6% earnings yield is the equity-side analog to a 6% coupon, with the difference being earnings can grow (or contract).

Five-factor distress signal originally calibrated for US public manufacturers. Above 3.0 is the conventional 'safe' zone, 1.8-3.0 is the grey zone, below 1.8 historically associates with elevated bankruptcy risk.

Joseph Piotroski's score for distinguishing winners from losers among low-P/B stocks. Each of 9 questions answers 0 or 1; the more 'yes' answers, the higher quality the recent year-over-year improvements.

Richard Sloan's accruals-quality measure. Persistent positive accruals (NI exceeds OCF) tend to mean-revert via earnings disappointments. Large negative values are usually fine but can flag one-time working-capital releases or non-cash drags. Phase D-2 made this a target-window metric centred at zero.