What is Earnings Per Share? Definition: Earnings per share (EPS) are the amount of profit of a publicly-traded company per share of its outstanding stock. Essentially it is how much each outstanding share will be allocated if the company were to distribute its profits equally to its outstanding shares annually. This measure is used as
What is EBITA? Definition: Earnings Before Interest Taxes and Amortization is an earnings financial metric commonly used to compare businesses within the same business line. In its purest form, it is a measure of a firm’s profitability while excluding taxes, interest, and amortization. Earnings Before Interest, Taxes, & Amortization Explained Analysts, as well as professional
What is EBITDA? Definition: EBITDA (Earnings Before Interest Taxes Depreciation and Amortization) is a financial metric used to evaluate companies operating performance. The measure provides a clear view of the overall performance and often used as an alternative to earnings or net income. Earnings Before Interest Taxes Depreciation and Amortization Explained EBITDA, as a financial
What is the Defensive Interval Ratio? Definition: Defensive interval ratio (DIR) refers to a financial metric used to determine the period (in days) in which a business can run without taping into its non-current or long term assets. This liquidity ratio is important in establishing the business’ financial health alongside other metrics like current ratio,
What is EBIT? Definition: Earnings Before Interest and Taxes (EBIT) is a financial metric that provides valuable information on the profit metrics of the underlying business or company. Referred to as operating earnings, the measure provides a clear idea on a company’s ability to earn profits from its operations. Earning Before Interest and Taxes Explained
What is Average Inventory Period? Definition: Average inventory period, also referred to as day inventory outstanding, measures the average number of days that a business or company holds inventory before it is sold. In essence, the average inventory period is the amount of time the goods sit on the shelf before the company can sell
What is the Break Even Point Formula? Definition: Break even formula refers to the stage at which the businesses, company, product or service will be profitable. This financial tool is important in helping the company or business to determine the number of goods and services it should sell so that it can cover costs such
What is Asset Turnover Ratio? Definition: Asset turnover ratio measures of the efficiency with which the company can generate sales or revenue. The efficiency ratio compares the net sales of a business relative to its total assets. In essence what the ratios show is how efficient the company can be utilization of assets to generate
What is the Average Collection Period? Definition: The average collection period refers to the timeframe that a company takes to receive or convert its accounts receivables (credit sales) into cash. Usually, businesses determine the average collection period so that they can know their cash position to enable them to meet obligations. Normally the average collection
What Is Purchase In Accounting? Definition: Purchase in accounting refers to the taking control of a given item or service by paying a set amount of money. Conversely, it is the exchange of money for a particular good or service. The process is usually undertaken by individuals or corporations in need of items or services.