Take Rate: Its Importance in the eCommerce and Fintech Industries

Today’s marketplaces and finance industries are changing at a rapid pace. The rise of eCommerce and Fintech disrupts how we buy and sell merchandise, car rides, banking, and groceries. With that rise comes new terms that help us determine how profitable these companies are, plus how to define their pricing power. The take rate has […]

How to Use Net Tangible Assets from a Company’s Balance Sheet

Net tangible assets can be a very useful metric for evaluating a company’s future profitability, especially in capital intensive industries. In this blog post, I’ll explain the basics behind net tangible assets and include a few easy and practical metrics for it. We’ll break it up into these simple parts [Click to Skip Ahead]: What […]

Beginner’s Guide: What is the P/B Ratio in the Stock Market?

The P/B, or Price to Book Value Ratio, compares a company’s book value with its price in the stock market. Book Value, also called Shareholders’ Equity, is simply a company’s assets minus their liabilities. Book value is not usually explicitly referred to in a company’s financial statements, but is commonly known as another term for […]

What is Capital Structure and How is it Related to Credit Health?

A company’s capital structure, combined with credit health, can drive the company forward regarding revenues, earnings, and cash flows. How the company chooses to fund growth goes a long way toward ultimate success. When investors search for investment quality, starting with the story, a balance sheet tells investors about the capital structure and how the […]

What is a Good P/E Ratio?

The Price to Earnings, or P/E ratio, is one of the most basic ways to try and figure out if a stock is generally cheap. The logic behind the P/E ratio is quite simple. The equation for the P/E ratio is simply Price / Earnings. A low P/E is generally considered better than a high […]

Negative PEG Ratio Implications: What Does It Mean? Why Does It Happen?

The implications for a negative PEG ratio might not be as bad as you think. It all depends on the reason behind the negative PEG ratio, which breaks into 2 possibilities. One spells trouble while the other might not. I’m writing this post as a response to an email I received from a reader. If […]

Trailing Twelve Months (TTM): Why It’s Used and How to Use It

When valuing a company, the number one imperative, use the most up-to-date numbers we can find. Numbers such as prices constantly update in the markets. But the accounting inputs we use come from accounting statements such as the income statement, and those don’t update on a constant basis. So what is the answer? The challenge […]

The Magic Formula to Beat the Market

Joel Greenblatt owns one of the best investing records on Wall Street, generating over 40 percent compounded returns during ten years. In 2005, Greenblatt published his seminal book, The Little Book that Beats the Market, in which he describes a method investors can use to beat the market, the Magic Formula. Greenblatt developed and tested […]

Your Essential Beginner’s Guide to the Forward Price to Earnings (P/E) Ratio

Forward Price to Earnings, or Forward P/E, is an easy ratio for estimating how expensive a stock is compared to its projected (“forward”) earnings. Similar to the Price to Earnings (P/E) ratio, it gives investors an apples-to-apples comparison for every stock in regards to its profitability (earnings) and stock price. The P/E is a common […]

What is Return on Equity and How Do I Calculate it?

“Focus on return on equity, not earnings per share.” Warren Buffett In the investing world, there always seems to be a big divide between “value and growth,” deep value (cigar butts) and quality value, and many others. Buffett notes throughout his Shareholder Letters that both sides of the coin can coexist; focusing on the company’s […]