This is a complete guide on how to calculate Operating Cash Flow Margin with detailed analysis, interpretation, and example. You will learn how to use its formula to evaluate a company’s profitability.
The operating cash flow margin is the percentage of a company’s earnings that flows down into the operating cash flow.
A high cash flow margin signifies an efficient business that doesn’t have excess expenses, while a low operating cash flow margin could be a sign of inefficiency.
Industries have varying standards for OCF margin, so when comparing the cash flow margin of multiple companies, it is best to do so within one specific industry.[Click to continue]
This is an ultimate guide on how to calculate Return on Retained Earnings Ratio (RORE) with in-depth analysis, interpretation, and example. You will learn how to use its formula to evaluate a firm’s profitability.
The return on retained earnings ratio (RORE) measures how effectively a company uses its profits from the previous years.
The ratio can inform investors whether the company is better off investing its profits back into the company, or paying its shareholders a dividend.
A high ratio suggests that the company should invest heavily in itself, while a low ratio means a company may benefit from paying a larger dividend.
It is not commonly used by investors to assess the attractiveness of an investment.
It is mostly used as a measure to aid a management company in decision making regarding dividend payouts.[Click to continue]
This is an in-depth guide on how to calculate Cash Flow Return on Investment Ratio (CFROI) with detailed interpretation, analysis, and example. You will learn how to use this ratio formula to assess a business profitability.
The cash flow return on investment (CFROI) is a metric that analyzes a company’s cash flow in relation to its capital employed.
This ratio is used by investors who believe that cash flow is the underlying driver of value in a company, as opposed to earnings or sales.
It is most informative when its compared to WAAC, because it allows investors to see the discrepancy between the amount a company paid to raise funds and the amount of return a company receives from those funds.[Click to continue]
This is a complete guide on how to calculate Return on Debt Ratio (ROD) with in-depth interpretation, analysis, and example. You will learn how to use its formula to evaluate a company’s profitability.
The return on debt (ROD), also known as the return on long-term liabilities, is a metric that measures that amount of profit a company generates in relation to the amount of debt it has on its balance sheet.
It is not a commonly used financial ratio. It is more often utilized in high-level financial modeling.
However, it can provide useful information on companies who are highly levered because it may show a company’s probability of defaulting.[Click to continue]