Fundamental Glossary

Profitability Metrics

How much of each rupee of sales or capital the business keeps as profit. 21 topics.

EBITDA

Earnings before interest, tax, depreciation, and amortization. A proxy for cash operating profit before capital spending.

EBIT

Earnings before interest and tax. In practice this is operating profit when there are no large non-operating items inside it.

EBT (Earnings Before Tax)

Profit after all expenses including interest, and before the tax charge.

PAT (Profit After Tax)

Profit left after tax. It is the bottom line that belongs to shareholders before dividing by the share count.

PBT (Profit Before Tax)

Profit after operating costs and interest, before income tax. The Indian-statement name for earnings before tax.

Gross Profit

Revenue minus the direct cost of producing the goods or services sold.

Gross Profit Margin

Gross profit as a percentage of revenue.

Operating Profit

Profit from the core business after operating expenses, including depreciation, and before interest and tax.

Operating Profit Margin (OPM)

Operating profit as a percentage of revenue.

Net Profit Margin (NPM)

Profit after tax as a percentage of revenue.

Return on Equity (ROE)

Profit after tax divided by shareholders' equity. The return owners earned on the book capital they have in the firm.

Return on Capital Employed (ROCE)

Operating profit relative to the capital used in the business, both equity and interest-bearing debt.

Return on Assets (ROA)

Profit relative to total assets. It shows how hard the asset base works.

Return on Invested Capital (ROIC)

After-tax operating profit divided by the capital investors have put into operations.

Return on Net Worth (RONW)

Profit after tax divided by net worth. In Indian filings this is the regulatory cousin of ROE.

Earnings Per Share (EPS)

Profit attributable to shareholders, divided by the number of shares.

Diluted EPS

Earnings per share after assuming that dilutive options, warrants, and convertibles have become shares.

Basic EPS

Earnings per share using only the shares currently outstanding, weighted for how long they were outstanding.

EBITDA Margin

EBITDA as a percentage of revenue.

EBIT Margin

EBIT as a percentage of revenue. The operating margin after depreciation and amortization.

Cash Return on Capital Invested

A cash version of return on capital, using cash earnings in place of accounting profit.