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The Benjamin Graham formula is a formula for the valuation of growth stocks. It was proposed by investor and professor of Columbia University, Benjamin Graham - often referred to as the "father of value investing". [1] Published in his book, The Intelligent Investor, Graham devised the formula for lay investors to help them with valuing growth ...
Debt-to-equity ratio. The debt-to-equity ratio (D/E) is a financial ratio indicating the relative proportion of shareholders' equity and debt used to finance a company's assets. [1] Closely related to leveraging, the ratio is also known as risk, gearing or leverage. The two components are often taken from the firm's balance sheet or statement ...
Return on capital. Return on capital (ROC), or return on invested capital (ROIC), is a ratio used in finance, valuation and accounting, as a measure of the profitability and value-creating potential of companies relative to the amount of capital invested by shareholders and other debtholders. [1] It indicates how effective a company is at ...
The study also found that the magic formula could be improved by using operating cash flows instead of EBIT. [8] The strategy also outperforms the Indian stock market over the period July 2012 - Feb 2020, according to a 2022 paper. Over this period the average return was 13.9% of 30-stock Magic Formula portfolio versus 9.3% for the BSE Sensex. [9]
Book value. In accounting, book value is the value of an asset [1] according to its balance sheet account balance. For assets, the value is based on the original cost of the asset less any depreciation, amortization or impairment costs made against the asset. Traditionally, a company's book value is its total assets [clarification needed] minus ...
The weighted average cost of capital (WACC) is the rate that a company is expected to pay on average to all its security holders to finance its assets. The WACC is commonly referred to as the firm's cost of capital. Importantly, it is dictated by the external market and not by management. The WACC represents the minimum return that a company ...
Overview. In its simplest form, a capitalization table, or "cap table" as it is often abbreviated, is a ledger that tracks the equity ownership of a company's shareholders: that is, how its capitalization is composed. However, the term can refer to the way in which any company keeps track of all of the relevant information related to all of its ...
Residual income valuation. Residual income valuation (RIV; also, residual income model and residual income method, RIM) is an approach to equity valuation that formally accounts for the cost of equity capital. Here, "residual" means in excess of any opportunity costs measured relative to the book value of shareholders' equity; residual income ...