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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 [...]

Gearing = Net Borrowings / Net Assets

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. [...]

Beware of Land Banking fraud. An article published by The Mirror UK on 28/8/08 entitled “Land International Scam surfaces as Sherwood Henderson”. Read it for yourself here before you invest money in UK Land Banking schemes: http://blogs.mirror.co.uk/investigations/2008/08/land-international-scam-resurf.html

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 [...]

There is an article in The Star, Saturday 27/9/08 which quoted Cheah Tek Kuang as saying that Malaysian companies are looking to borrow from banks because the domestic bond market has dried up. Most Malaysian companies are healthy and it does not make sense for them to issue bonds at current prices. Basically AMMB’s performance targets [...]