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The justified P/S ratio is calculated as the price-to-sales ratio based on the Gordon Growth Model. Thus, it is the price-to-sales ratio based on the company's fundamentals rather than . Here, g is the sustainable growth rate as defined below and r is the required rate of return. [1]
Learn how to value assets by comparing them to a peer group using market values and standardized multiples. Find out the advantages and disadvantages of this method, and the types of multiples used in different contexts.
Learn about the assessment of the viability, stability, and profitability of a business or project using financial statements and other reports. Find out the techniques, challenges, and applications of financial analysis in accounting, finance, and management.
Operating margin is the ratio of operating income to net sales, usually expressed in percent. It measures the profitability of a business after accounting for all costs except interest, taxes, depreciation, and amortization.
Gross margin is the difference between revenue and cost of goods sold, divided by revenue, expressed as a percentage. Learn how to calculate gross margin, how it differs from gross profit, and how it is used in sales and marketing.
A financial ratio is a measure of the relative magnitude of two selected values from an enterprise's financial statements. Learn about the sources, purposes, types and comparisons of financial ratios, and the abbreviations and terminology used in accounting.
Each cash inflow/outflow is discounted back to its present value (PV). Then all are summed such that NPV is the sum of all terms: = (+) where: t is the time of the cash flow; i is the discount rate, i.e. the return that could be earned per unit of time on an investment with similar risk
Current ratio vs. quick ratio vs. debt-to-equity Other measures of liquidity and solvency that are similar to the current ratio might be more useful, depending on the situation.