Brian Feroldi on LinkedIn: Investing Abbreviations Cheat Sheet If you want to invest, you MUST… | 29 comments (2024)

These are basically accounting terms that have been abbreviated. If you store this on your computer you will be able to identify the various management positions, CFO, CEO etc. I find these abbreviated symbols very annoying myself, and the writers do not seem to realize that the reader loses interest once the reader does not understand the significance of the abbreviation.

Investing Abbreviations Cheat SheetIf you want to invest, you MUST understand the lingo.Use this mega-list of investing abbreviations as a handy cheat sheet:1H – First half of the year24/7 – 24 hours a day, seven days a weekAOP – Adjusted Operating ProfitAP – Accounts payableAR – Accounts receivableARPU – Average revenue per userBLS – Balance sheetBOM – Bill of materialsB2B – Business-to-businessB2C – Business to ConsumerB2G – Business-to-governmentCAGR – Compound annual growth rateCAPEX – Capital ExpenditureCAPM – Capital asset pricing modelCEO – Chief executive officerCFA – Chartered Financial AnalystCFO – Chief Financial OfficerCOE – Cost of EquityCOGS – Cost of Goods SoldCPI – Consumer Price IndexDPO – Days Payable OutstandingDSO – Days Sales OutstandingEAY – Effective Annual YieldEBIT - Earnings before Interest & TaxesEBT - Earnings before TaxesEBITA – Earnings before interest and taxes and amortizationEBITDA – Earnings before Interest, Taxes, Depreciation, and AmortizationEPS – Earnings per shareFIFO – First In, First OutFY – Fiscal year or Financial yearGAAP – Generally Accepted Accounting PrinciplesGDP – Gross Domestic ProductGP – Gross ProfitG&A – General and Administration expenseIE – Interest expenseIPO – Initial public offeringIRR – Internal Rate of ReturnKPI – Key Performance IndicatorLIFO – Last In, First OutLLC – Limited Liability CompanyLTV – Loan to ValueMoM – Month on Month / Month over MonthMTD – Month-to-dateNAV – Net asset valueNOPAT – Net Operating Profit After TaxNYSE – New York Stock ExchangeOKR – Objectives and key resultsP&L – Profit and LossP/E – Price-to-earnings ratioPEG – Price-to-earnings growth ratioPP&E – Property, plant, and equipmentQTD – Quarter-to-dateRE – Retained EarningsREIT – Real Estate Investment TrustROA – Return on assetsROCE – Return on Capital EmployedROE – Return on EquityROI – Return on InvestmentROIC – Return on Invested CapitalR&D – Research and DevelopmentS&M – Sales & MarketingSAAS – Software-as-a-ServiceSAM – Serviceable Addressable MarketSEC – Securities and Exchange CommissionSG&A – Sales, General, and Administrative expensesTSR – Total shareholder returnTTM – Trailing Twelve MonthsVC – Venture CapitalWACC – Weighted average cost of capitalYTD – Year-to-date***➕ Follow Long Term Mindset for more content like this.Want to master the basics of accounting (for free)?Enroll in our email-based course: Financial Statements SchoolGet started here (It's free) → https://lnkd.in/eKbRV7g6If this post was helpful, repost it ♻️ to share with your audience.

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Investing Abbreviations Cheat SheetIf you want to invest, you MUST understand the lingo.Use this mega-list of investing abbreviations as a handy cheat sheet:1H– First half of the year24/7–24 hours a day, seven days a weekAOP–Adjusted Operating ProfitAP–Accounts payableAR–Accounts receivableARPU–Average revenue per userBLS–Balance sheetBOM–Bill of materialsB2B–Business-to-businessB2C–Business to ConsumerB2G–Business-to-governmentCAGR–Compound annual growth rateCAPEX–Capital ExpenditureCAPM–Capital asset pricing modelCEO–Chief executive officerCFA–Chartered Financial AnalystCFO–Chief Financial OfficerCOE–Cost of EquityCOGS–Cost of Goods SoldCPI–Consumer Price IndexDPO–Days Payable OutstandingDSO–Days Sales OutstandingEAY–Effective Annual YieldEBIT - Earnings before Interest & TaxesEBT - Earnings before TaxesEBITA–Earnings before interest and taxes and amortizationEBITDA–Earnings before Interest, Taxes, Depreciation, and AmortizationEPS–Earnings per shareFIFO–First In, First OutFY–Fiscal yearorFinancial yearGAAP–Generally Accepted Accounting PrinciplesGDP–Gross Domestic ProductGP–Gross ProfitG&A–General and Administration expenseIE–Interest expenseIPO–Initial public offeringIRR–Internal Rate of ReturnKPI–Key Performance IndicatorLIFO–Last In, First OutLLC–Limited Liability CompanyLTV–Loan to ValueMoM– Month on Month / Month over MonthMTD–Month-to-dateNAV–Net asset valueNOPAT–Net Operating Profit After TaxNYSE–New York Stock ExchangeOKR–Objectives and key resultsP&L–Profit and LossP/E–Price-to-earnings ratioPEG–Price-to-earnings growth ratioPP&E–Property, plant, and equipmentQTD–Quarter-to-dateRE–Retained EarningsREIT–Real Estate Investment TrustROA–Return on assetsROCE–Return on Capital EmployedROE–Return on EquityROI–Return on InvestmentROIC–Return on Invested CapitalR&D–Research and DevelopmentS&M– Sales & MarketingSAAS–Software-as-a-ServiceSAM– Serviceable Addressable MarketSEC–Securities and Exchange CommissionSG&A–Sales, General, and Administrative expensesTSR–Total shareholder returnTTM– Trailing Twelve MonthsVC–Venture CapitalWACC–Weighted average cost of capitalYTD–Year-to-date________________________Original Content Creator: Brian Feroldi (give him a follow)

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Capital allocation is job number one for CEOsHow we can measure capital allocation?Understanding ROIC is key.Let's learn more.We will define the formula, and inputs and briefly discuss why. Keep in mind there are a gazillion ways to determine ROIC; this is my fav."A company creates value when the present value of the cash flows from its investments are greater than the cost of the investments. In other words, one dollar invested in the business becomes worth more than one dollar in the market." Michael MauboussinROIC helps investors measure how effectively management reinvests the one dollar to grow beyond the initial investment. As with many metrics, the higher the better, and the longer the better. It is one way to measure how well management effectively allocates capital.So how do we calculate it? ROIC = NOPAT ÷ Invested Capital Where: 💰NOPAT = Net operating profit after taxes ⚖️Invested Capital = The net assets necessary to generate the NOPATLet's unpack NOPAT first, simplified. NOPAT = EBIT x (1 - tax rate) We can find both inputs on $COST's income statement, with EBIT also equaling operating income. EBIT = $83,383 million Tax rate = 13.1% $COST NOPAT = 83,383 x (1-13.1%) = $72,459 Easy, now the fun part.Now invested capital. A word first, we have several ways to go about calculating invested capital. We can approach from the operating side or the financing side. Each has its benefits, I like operating because it forces me to look deeper into operations. Each to their own.Invested capital from an operations approach. Current assets - Non-interest bearing currrent liabilities = Net working capital + Net PP&E + Acquired Intangibles + Goodwill + Other assets All of which gives us Invested capital.We can find all of this on the balance sheet: Net Working capital first +Accounts receivable - $44,261 +Inventory - $3,742 +Other current assets - $16,924 = Current assets of $64,927Now current liabilities: +Accounts payable - $19,000 +Accrued comp - $10,661 +Short-term income taxes - $4,067 +Short-term unearned rev - $43,538 +Other current liabilities - $13,067 = Current liabilities of $90,333 Net working capital = 64,927-90,333 = -25,406Then we take the net working capital and add the other inputs: +Net working capital = -25,406 +Net PP&E - 74,398 +Goodwill - 67,524 +Intangibles - 11,298 +Other assets - 21,897 Total Invested Captial = $148,711Now we can put it all together to determine $MSFT ROIC NOPAT = $72,459 Invested Capital = $148,711 ROIC = $72,459 ÷ $148,711 = 48.7%There are many ways to calculate ROIC, but I feel this one gives me the most insight into the assets used to generate growth.***P.S. Want to grow as an investor?Join our FREE Nuggets emails to receive six weekly knowledge nuggets every Tuesday.Join here (it's free) → https://lnkd.in/gxbjyspK

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explained in detail......

𝐘𝐨𝐮𝐫 𝐆𝐨-𝐓𝐨 𝐅𝐢𝐧𝐚𝐧𝐜𝐢𝐚𝐥 𝐊𝐏𝐈: Gross Margin, EBITDA, Net Profit, or EVA? When it comes to tracking success, every financial pro has their favorite KPI. Some swear by Gross Margin for that revenue health check, while others dive into EBITDA for operational insight. Net Profit's a classic, but EVA (Economic Value Added) brings that extra depth to the table.What's your financial flavor? 🍬 Do you swear by one of these KPIs or mix and match? #Finance #KPIs #GrossMargin #EBITDA #NetProfit #EconomicValueAdded #FinancialInsights #DecisionMaking

المنشور اضافة مهمة كمعلومات مهنية، او تحديث للمعلومات التي لدينا.1) Gross profit margin = Gross profit / Revenuethe higher percentage is better.2) Expense Ratio (Direct operating or Indirect operating) =Direct operating or Indirect operating / RevenueThe lower percentage is better.3) Effective tax ratio = total tax / Earning before taxshow how the company manages its taxes 4) Tax Burden = Net income / Earning before taxالعبء الضريبي " shows how much is left for shareholders after tax "5) EBITDA Margin = EBITDA / Revenuesto measure a company's profitability from operations.6) EBIT Margin = EBIT / RevenuesLower EBIT Margins indicate lower profitability from a company"allows investors to understand true business costs of running a company"7) EBT Margin = EBT / Revenuesreflect a firm's performance when compared with industry peersIt is the money retained internally by a company before deducting tax expenses8) Net profit margin = Net Income / Revenuesmeasures how much net income or profit is generated as a percentage of revenue.#financialratios

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Reasons Change – So Can YouByRobert MoskowitzThere’s a financial system calledZero-Based Budgeting, once extremely fashionable and still used in some companies, that requires every recurring expenditure to be fully reconsidered each time it comes up. In other words, just because a company spent a certain amount on an item last year doesn’t mean it should spend that same amount – or any amount – again this year. The idea is to start at zero and justify every dollar of spending.It’s an interesting principle you can apply far more widely than dollars and cents:https://lnkd.in/giU6H-TZ

Profit Ratios every investor should know: 💸Accounting is the language of business.Level up your business & investing skills by memorizing these ratios:1: Gross Margin➡️What: The percentage of revenue that is translated into gross profit.🟰 Formula: Gross Profit / Sales2: EBITDA Margin➡️What: The percentage of sales that turns into profit before interest, taxes, depreciation, and amortization are subtracted.🟰 Formula: EBITDA / Sales3: Operating Margin➡️What: The percentage of sales that turn into operating income.🟰 Formula: Operating Income / Sales4: EBIT Margin➡️What: The percentage of sales that turns into profit before interest & taxes are subtracted.🟰 Formula: Earnings Before Interest & Taxes / Sales5: EBT Margin (Pre-Tax Margin)➡️What: Percentage of sales that turn into operating income.🟰 Formula? Earnings Before Taxes / Sales6: Net Profit Margin➡️What: Percentage of sales that remains as profit after all costs are subtracted.🟰 Formula: Net Income / Sales7: Free Cash Flow Margin➡️What: The percentage of sales translated into free cash flow.🟰 Formula: Free Cash Flow / Sales8: Earnings Per Share (EPS)➡️What: How much money a company makes for each share outstanding.🟰 Formula: Net Income / Shares Outstanding9: Return On Assets (ROA)➡️What: How much profit a company generates from its total assets.🟰 Formula: Net Income / Total Assets10: Return On Equity (ROE)➡️What: Measures how profitable a company is in relation to its equity (the money shareholders have invested in the business).🟰 Formula: Net Income / Equity11: Return On Invested Capital (ROIC)➡️What: Shows you how efficiently a company is allocating capital.🟰 Formula: NOPAT / Total Invested Capital12: Return On Capital Employed (ROCE)➡️What: Measures the profitability of a company and the efficiency with which it uses its capital.🟰 Formula: EBIT / Long-Term Debt + Equity13: Free Cash Flow Conversion➡️What: Measures how much earnings are translated into free cash flow🟰 Formula: Free Cash Flow / Net Income14: Owner's Earnings➡️What: Measures how much cash can be taken out of the business and given to owners🟰 Formula: Net Income + (Depreciation & Amortization) +/- Non Cash Charges - Maintenance Capex +/-Changes in working capitalWhat ratios do you track before making an investment? Let me know in the comments section below!FollowLong Term Mindset for more content like this.***Want to master the basics of accounting (for free)?Enroll in our free, 5-day, email-based course that explains the Balance Sheet, Income Statement, and Cash Flow Statement in plain English.Check it out here (It's free) →https://lnkd.in/eKbRV7g6If this post was helpful, repost it ♻️ to share with your audience.

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