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*Category Archives for "Profitability Ratio"*

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.

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.

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