Equities

The expense ratio is the annual fee a fund charges as a percentage of assets under management. Learn what it includes, what it excludes, how fees compound over decades, and what constitutes a good expense ratio for ETFs and mutual funds.

Free cash flow (FCF) measures the cash a company generates after funding operations and capital expenditures. Learn the FCFF and FCFE formulas, how to calculate FCF from financial statements, and how to use FCF yield and FCF margin to evaluate business quality.

Profit margins measure what percentage of revenue a company retains as profit at each stage of the income statement. This guide covers the three key margins — gross, operating, and net — with formulas, industry benchmarks, and real-world examples.

Learn what index funds are, how they work, and why passive investing outperforms most active strategies. Covers SPIVA evidence, fee compounding, fund selection, and common mistakes.

Return on assets (ROA) measures how efficiently a company converts its total asset base into profit. This guide covers the ROA formula, industry benchmarks for asset-heavy vs asset-light businesses, the ROA vs ROE comparison, and common analytical pitfalls.

Return on invested capital (ROIC) measures how much after-tax operating profit a company generates relative to the total capital invested in its operations. When ROIC exceeds WACC, the company creates economic value.

A stock market index tracks the performance of a group of stocks, serving as a benchmark for portfolio evaluation, the basis for index funds and ETFs, and an economic barometer. This guide covers weighting methods, major U.S. and international indexes, reconstitution, and why index methodology matters for investors.

Short selling lets investors profit from falling stock prices by selling borrowed shares. Learn the mechanics, margin requirements, short squeeze risk, and how shorting compares to buying put options.

Return on equity is the single most important profitability metric for equity investors. It measures how much profit a company generates with the money shareholders have invested — and that one number encodes management effectiveness, capital discipline, and competitive positioning. Warren Buffett has famously used ROE as a quality screen — his well-known heuristic of […]

Market capitalization measures a company’s total equity value by multiplying its stock price by shares outstanding. Learn how market cap classifies stocks by size, how it differs from enterprise value, and why it matters for index construction and investment strategy.

The debt-to-equity ratio measures how much debt a company carries relative to shareholders equity. Learn the D/E formula, net D/E variant, industry benchmarks, and how to interpret leverage across sectors.

Earnings per share is the most widely cited measure of a company’s profitability on a per-share basis. When a company reports quarterly results, EPS is the number that moves stock prices — beating or missing analyst consensus by even a few cents can trigger significant price swings. Understanding how EPS is calculated, what distinguishes high-quality […]