PE Ratio = Share Price / Earnings Per Share Where Earnings per share (EPS) is a company’s Net Profit After Tax and Outside Equity Interest, divided by the Weighted Average Equivalent Number of Shares issued. For example if a company makes a net profit after tax of RM10 million and it has 100 million issued [...]
This ratio is useful as a rule-of-thumb. For example if the corporate tax rate is 26%, then Tax Expense divided by Profit Before Tax should be around that range. Differences usually arise because of either: 1. Timing issues (eg. expenses being tax deductible in a different accounting period) 2. Permanent differences (eg. expenses not being [...]
EBIT Margin = EBIT / Revenue It is a measure of the company’s earnings margin before the impact of tax and financing.
Interest cover is a company’s EBIT divided by its Net Interest Expense. For example take a company has EBIT of RM100 million per year. Let’s say its Interest Income is RM3 million while Interest Expense is RM13 million. That means its Net Interest Expense is RM10 million. Therefore Interest Cover is 10 times. This is [...]
Net Cash = Cash – Borrowings Cash includes bank balances, deposits, cash and Money Market Instruments (which may be reported as “Short Term Investments” by some companies – eg Genting) but excludes Cash held under Housing Development Accounts in the case of companies which are involved in property development. Borrowings comprise of interest bearing debt [...]
NTA = (Shareholders Funds – Intangible Assets) / No of Issued Shares This is a quick and useful way to get a feel for a company’s value. For example, if a company’s NTA is RM1.50 and its share price is RM3.00, it implies a company’s share price is trading at twice its tangible book value. [...]
EV = Market Cap + Net Borrowings It is a measure of the value of a company’s businesses excluding the cash holdings and financial debt of the company. If a company has more cash than borrowings, then its EV will be Market Cap less the net cash position. Why Do We Have to Look at [...]
Market Capitization or Market Cap = Number of Issued Shares x Latest Share Price For example if a company has 100 million shares and its share price is RM5, its market cap is RM500 million. In theory the stock market is placing a value of RM500 million for that whole company. Note: Appraising a company’s [...]
In this website, you will see some financial terms or ratios which we use quite often. Click on the below links to see what we mean. Market Value Indicators Market Capitalization Enterprise Value Net Tangible Assets Valuation Indicators PE Ratio EV / EBIT (or EBIT Multiple) Forward Earnings & PEG Ratio Dividend Yield Financial Strength [...]
