What is Shareholder Value Added (SVA) and how is it used in value investing?

July 9, 2024 No Comments

A: A: Shareholder value added (SVA) is a performance metric that results from subtracting a corporation’s cost of capital from its net operating profit after tax. Some value investors use SVA as a tool to judge the corporation’s profitability and management efficacy. This line of

What is the accounting treatment for unusual or infrequent items for IFRS and U.S. GAAP?

July 9, 2024 No Comments

A: There are significant differences in the ways generally accepted accounting principles, or GAAP, and the international financial reporting standards, or IFRS, treat income or expense items that are irregular. Investors should understand these items and how they are reported. Unusual or Infrequent Items Some

What is the average debt/equity ratio for the food and beverage sector?

July 9, 2024 No Comments

A: The food and beverage sector provides its investors with a variety of investing opportunities ranging from major soft drink companies to major diversified food companies. To determine whether a stock in this sector is appropriate to purchase for a portfolio, it is necessary to

What is the average debt/equity ratio of airline companies?

July 9, 2024 No Comments

A: As of May 2015, based on trailing 12-month data, the average long-term debt/equity ratio of airline companies is 91.53. Airline companies are included in the major airlines and regional airlines subsectors, which are a part of the transportation sector. The debt/equity ratio measures a

What is the average debt/equity ratio of companies in the financial services sector?

July 9, 2024 No Comments

A: Investors and lenders assess a company’s financial stability by determining its debt to equity (D/E) ratio, also interpreted as the relationship between financing a company’s operations through shareholders contributions and creditor contributions. The D/E ratio is a simple calculation, expressed as a company’s total

What is considered a favorable price to sales ratio?

July 9, 2024 No Comments

A: Price to sales (P/S) ratios between 1 and 2 are generally considered good, and ratios less than 1 are considered excellent. As with all equity valuation metrics, average P/S ratios can vary significantly between industries. It is important to view a company’s P/S ratio

What is the average debt/equity ratio of companies in the wholesale sector?

July 9, 2024 No Comments

A: Standard debt-to-equity, or D/E, ratios among wholesalers fall between 0.8 and 1.1, although this range changes from year to year. Even though there are a very large number of subindustries in the wholesale sector, a surprising number of them report average D/E numbers within

What is considered a good net debt-to-equity ratio?

July 9, 2024 No Comments

A: The optimal debt to equity (D/E) ratio varies widely by industry, but the general consensus is that it should not be above 2. While some very large companies in fixed asset-heavy industries may have ratios higher than 2, these are the exception rather than

What is considered a healthy EV/EBITDA?

July 9, 2024 No Comments

A: The enterprise-value-to-EBITDA ratio varies by industry. However, the EV/EBITDA for the S&P 500 has typically averaged from 11 to 14 over the last few years. As of the end of 2017, the average EV/EBITDA for the S&P was 12.75. As a general guideline, an EV/EBITDA value below 10 is commonly interpreted

What is considered a high debt-to-equity ratio and what does it say about the company?

July 9, 2024 No Comments

A: The debt-to-equity ratio is a measure of a company’s financial leverage that relates the amount of a firms’ debt financing to the amount of equity financing. It is calculated by dividing a firm’s total liabilities by total shareholders’ equity. What is considered a “high”

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