Total Shares Outstanding

Outstanding Shares refers to the total number of a company's shares that are currently owned by all its shareholders, including institutional investors, individual investors, and insiders. It represents the ownership interest in the company and is used in key financial metrics such as market capitalization and earnings per share (EPS).

Market Capitalization

Market Capitalization represents the total value of a company's outstanding shares in the stock market. It is an essential metric for investors to determine the company's size and value relative to others in the industry.

$$\text{Market Cap} = \text{Share Price}\times\text{Total Shares Outstanding}$$

Cash Equivalents

Cash Equivalents are short-term, highly liquid assets that can be quickly converted into cash with minimal risk of losing value. They are typically investments with maturities of three months or less and are considered as good as cash for financial reporting purposes.

• Highly Liquid – Can be quickly converted into cash.
• Short Maturity – Typically mature in three months or less.
• Low Risk – Have minimal risk of losing value due to interest rate fluctuations or market conditions.

Examples of Cash Equivalents:

• Treasury Bills (T-Bills) – Short-term government securities with maturities under 90 days.
• Commercial Paper – Unsecured short-term debt issued by corporations.
• Money Market Funds – Funds that invest in highly liquid, short-term instruments.
• Certificates of Deposit (CDs) – Bank deposits with short maturity periods (under 90 days).
• Repurchase Agreements (Repos) – Short-term borrowing for dealers in government securities.

Enterprise Value (EV)

Enterprise Value (EV) is a comprehensive measure of a company's total value, reflecting not only its equity value (market capitalization) but also its debt and cash positions. It provides a more complete picture of a company's valuation, especially useful in assessing the cost of acquiring a business.

$$\text{EV} = \text{Market Cap}+\text{Total Debt}-\text{Cash and Cash Equivalents}$$

EPS (Earnings Per Share)

Earnings Per Share a financial metric that represents the portion of a company’s net income allocated to each outstanding share of common stock. It is a key indicator of a company's profitability and is widely used by investors to assess financial performance.

$$\text{EPS} = \frac{\text{Net Income}}{\text{Outstanding Shares}}$$

Net Income

Net Income is the total profit a company earns during a specific period after deducting all expenses, taxes, and costs from its total revenue.

$$\text{Net Income} = \text{Total Revenue} - (\text{Total Expenses} + \text{Taxes} + \text{Interest})$$

Price-to-Earnings (P/E) Ratio

The Price-to-Earnings (P/E) Ratio compares a company's stock price to its earnings per share (EPS) to evaluate its valuation.

• High P/E: Stock may be overvalued or expected to grow.
• Low P/E: Stock may be undervalued or facing challenges.

$$\text{P/E Ratio} = \frac{\text{Market Price per Share}}{\text{Earnings per Share (EPS)}}$$

Price-to-Sales (P/S) Ratio

The Price-to-Sales (P/S) Ratio is a financial metric that compares a company's market capitalization (or share price) to its revenue. It is used to evaluate how much investors are willing to pay for each dollar of the company’s sales and is particularly useful for assessing companies with little or no profits.

$$\text{P/S Ratio} = \frac{\text{Market Capitalization}}{\text{Total Revenue}}$$

Or, on a per-share basis:

$$\text{P/S Ratio} = \frac{\text{Market Price per Share}}{\text{Revenue per Share}}$$

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Price-to-Book (P/B) Ratio

The Price-to-Book (P/B) Ratio compares a company's market value to its book value.

• P/B < 1: Possibly undervalued.
• P/B > 1: Possibly overvalued or reflecting strong investor confidence.

$$\text{P/B Ratio} = \frac{\text{Market Price per Share}}{\text{Book Value per Share (BVPS)}}$$

Price-to-Sales (P/S) Ratio

The Price-to-Sales (P/S) Ratio compares a company's market capitalization to its revenue.

• P/S < 1: Stock may be undervalued.
• P/S > 1: Investors are paying more for each dollar of sales.

$$\text{P/S Ratio} = \frac{\text{Market Capitalization}}{\text{Total Revenue}}$$

EBITDA

EBITDA stands for Earnings Before Interest, Taxes, Depreciation, and Amortization. It is a measure of operational performance, excluding the impact of financing and accounting decisions.

• Valuation metric (EV/EBITDA)
• Performance benchmarking
• Debt analysis

These financial metrics provide insights into a company's valuation, profitability, and financial health, making them essential tools for investors and analysts.

$$\text{EBITDA} = \text{Net Income} + \text{Interest} + \text{Taxes} + \text{Depreciation} + \text{Amortization}$$