SRXH

Adjusts the numerator for debt and cash so heavily-levered or cash-rich companies become comparable on a revenue-multiple basis. Particularly useful for cross-industry valuation work where some firms run net cash and others carry meaningful debt loads. Same caveats as P/S: best read alongside gross margin to translate the multiple into expected steady-state earnings power.

Capital-structure-agnostic earnings yield. Pairs with Greenblatt ROC to compute the famous Magic Formula rank (the universe-rank of earnings yield plus universe-rank of return on capital). Pre-tax operating earnings divided by the full claim on the firm gives a cleaner cross-firm valuation comparison than P/E or earnings yield alone, because it strips out the distortions from leverage, cash, and tax structure.

Share price divided by per-share book value of common equity — what the market values the franchise at versus what the accountants say it's worth on paper. Most informative for asset-heavy businesses (banks, insurers, industrials) where book value approximates a liquidation floor; far less informative for asset-light franchises whose value sits in brand, software, or other intangibles that GAAP under-states or excludes entirely.

Useful when earnings are negative, noisy, or one-time-distorted (early-stage growth, restructurings, cyclical troughs). Works best within an industry, not across — gross margin profiles vary so wildly that 1x P/S for a software company means something completely different from 1x P/S for a grocery chain.

Productivity of the asset base — how efficiently the firm converts assets into sales. Combined with net margin, this is the core of the DuPont decomposition: ROA = net margin × asset turnover. Two businesses can land at the same ROA via opposite paths: thin-margin / high-turnover (Costco, supermarkets) vs. fat-margin / low-turnover (luxury, software).

Easier to compare than operating margin across firms with very different leverage and depreciation profiles, because it adds D&A back. Software platforms commonly run above 30%; capital-light service businesses cluster around 20%; capital-intensive industrials sit below 15%. The weakness: ignores the cash needed to maintain the asset base — pair with FCF margin for a complete profitability picture.

End-to-end conversion ratio: of every dollar of revenue, how much falls through to genuine free cash flow available to all capital providers? More honest than net margin because it accounts for the capex needed to maintain (and grow) the business. The single best indicator of whether the business is a quality compounder or a GAAP-earnings illusion.

Free cash flow the business throws off, divided by what the market currently charges for the equity. Treats the equity claim as a perpetual stream of free cash. More honest than earnings yield because it reflects the cash actually available to shareholders after all reinvestment. Cyclicals can swing below zero in a downturn — read with the trailing-cycle range.

Joel Greenblatt's reformulation of return-on-capital, designed to filter for businesses that earn high pre-tax returns on the tangible operating capital that actually generates EBIT. Excludes goodwill and acquired intangibles so that two firms with the same operating economics rank similarly regardless of acquisition history. Pairs with Greenblatt's Earnings Yield (EBIT/EV) to produce the famous 'Magic Formula' rank — quality stocks at value prices.

Operating margin minus interest, tax, and below-the-line items. Useful but noisier than operating margin: tax rate changes, debt-service shifts, and one-time items can move net margin year-over-year even when the operating business is unchanged. Always pair with operating margin and FCF margin — divergence between them is a tell about leverage, tax structure, or earnings quality.

Captures the leverage between revenue and operating profit — the core test of whether a business converts sales into income at the operating level. Independent of capital structure (excludes interest) and tax-jurisdiction noise. Trend matters as much as level: an improving operating margin indicates pricing power or operational efficiency gains; a falling margin signals input-cost pressure, wage inflation, or competitive erosion.

Capital-efficiency measure that ignores how the assets are financed. Useful for comparing within a sector but heavily biased by industry — banks and utilities run low ROA by design (huge balance sheets), software and franchise businesses run high ROA (asset-light). The DuPont decomposition links it to ROE: ROE = ROA × (assets / equity), so leverage inflates the gap between ROA and ROE.

Pre-tax cousin of ROIC using operating capital employed (long-term debt plus equity, approximately equal to total assets minus current liabilities). Damodaran publishes ROCE by industry annually, so it benchmarks cleanly against sector norms. Particularly useful for capital-intensive businesses where you want to see pre-tax returns on the long-term capital base.

The headline profitability metric. Net income divided by average book equity tells you how productive each dollar of shareholders' capital is. High sustained ROE compounds book value when the business can reinvest at a similar return. Two warnings: ROE rises mechanically with leverage (high D/E inflates ROE without making the business better), and aggressive buybacks can shrink the equity denominator faster than they shrink earnings, artificially boosting ROE even as fundamental returns are flat.

Bottom-line growth on a per-share basis — captures both operating progress and any net buyback effect. The denominator uses the absolute value of prior EPS so a turnaround from negative to positive earnings reads with the conventional sign rather than producing arithmetic nonsense. Pair with revenue growth to separate real franchise expansion from buyback-driven per-share lift.

Top-line growth — the cleanest way to see whether the franchise is expanding. Best read alongside margin trend: revenue rising while margin compresses is often discount-driven volume rather than real growth, and can mask underlying weakness. Compare to industry peers — what looks weak in absolute terms can be best-in-sector if the industry is contracting.

How long the average sale sits as a receivable before becoming cash. Earnings-quality flag: receivables growing faster than revenue is one of the cleanest tells for revenue recognition stretching — Beneish flagged exactly this pattern as a primary fraud indicator. Industry context matters: B2B / project businesses run longer DSO than retail, but the trend is more important than the level.

DuPont productivity measure. Combined with margin, it tells the asset-light vs. asset-heavy story: low turnover with high margin is the luxury / branded model, high turnover with thin margin is the supermarket / discount model. Very high turnover in retail can also flag stockouts (lost sales) — the metric reads best industry-relative, not absolute.

CCI measures how far the current typical price ((H+L+C)/3) sits from its rolling SMA, normalized by the mean absolute deviation. Originally built for commodity cycles by Donald Lambert; widely used as a generic momentum / overbought-oversold gauge on any asset. CCI is unbounded but ±100 is the conventional 'normal range' edge — readings beyond that are interpreted as strong directional thrusts or stretched extremes depending on context.

+1 while CCI is below -100 (oversold); -1 while CCI is above +100 (overbought); 0 inside the ±100 band.

+1 = oversold (stretched below the typical-price mean, mean-reversion buy bias), -1 = overbought (stretched above), 0 = inside the ±100 band.

MFI is essentially RSI computed on (typical price × volume) instead of close alone, so high-volume bars push the oscillator harder than low-volume bars. It's 0-100 bounded and uses the same 20/80 OB-OS convention as a slower RSI. Because it folds in volume, MFI can flag distribution / accumulation underneath a flat price tape that RSI would miss.

+1 while MFI is below 20 (oversold); -1 while MFI is above 80 (overbought); 0 in between.

+1 = oversold (bullish, volume-weighted), -1 = overbought (bearish), 0 = mid-range.

The 14-period Relative Strength Index is the canonical Wilder momentum oscillator, bounded 0-100. Readings below 30 mark oversold conditions and above 70 mark overbought. This signal flags time spent at those extremes: bullish while RSI is at or below 30 (a mean-reversion bounce bias), bearish while it is at or above 70. The 30/70 thresholds are standard practice layered on top of the TA-Lib primitive.

+1 while RSI(14) is at or below the oversold threshold (default 30); -1 while it is at or above the overbought threshold (default 70); 0 in between.

+1 = oversold (bullish mean-reversion bias), -1 = overbought (bearish), 0 = RSI in its mid-range.

Stochastic RSI applies the stochastic oscillator formula to RSI values rather than price, producing a faster, more sensitive 0-100 momentum read. Readings below 20 are oversold and above 80 overbought. The signal latches bullish when FastK crosses above FastD while in the oversold zone and stays on until FastK drops back below FastD; the bearish mirror latches on a cross down in the overbought zone. More reactive than plain RSI, so best filtered by trend context.

+1 latches when FastK crosses above FastD while FastK is below the oversold threshold (default 20), and holds until FastK falls back below FastD; -1 latches when FastK crosses below FastD while FastK is above the overbought threshold (default 80), and holds until FastK rises back above FastD; 0 otherwise.

+1 = bullish oversold cross still latched, -1 = bearish overbought cross still latched, 0 = no latched cross.