What is the Portfolio Turnover Ratio? The portfolio turnover ratio is the rate of which assets in a fund are bought and sold by the portfolio managers. In other words, the portfolio turnover ratio refers to the percentage change of the assets in a fund over a one-year period. Formula for the Portfolio Turnover Ratio…
What is a Cyclical Industry? A cyclical industry refers to an industry whose revenue generation capabilities are tied to the business cycle. In other words, a cyclical industry is an industry whose performance is correlated to the business cycle. Understanding the Business Cycle To understand a cyclical industry, an understanding of the business cycle is…
What is a Corporate Raider? A corporate raider is an individual or a party that purchases a substantial position (enough to gain a controlling position) in a company that is deemed undervalued. In other words, a corporate raider is an individual that takes control (commonly through a hostile takeover) of an undervalued company. …
What is the CAPEX to Operating Cash Ratio? The CAPEX to Operating Cash Ratio assesses how much of a company’s cash flow from operations is being devoted to capital expenditure. Such investments entail engaging in capital-intensive projects such as expanding a production facility, launching a new product line, or restructuring a division. The CAPEX to Operating…
What is the Operating Cash to Total Cash Ratio? The Operating Cash to Total Cash Ratio measures how much of a business’ generated cash flow comes from its core operations. This can be used as an indicator of how well a business can sustain its current cash management strategy in the long term. A business that…
What is the Times Interest Earned Ratio? The Times Interest Earned (TIE) ratio measures a company’s ability to meet its debt obligations on a periodic basis. This ratio can be calculated by dividing a company’s EBIT by its periodic interest expense. The ratio shows the number of times that a company could, theoretically, pay its…
What is Return on Total Capital (ROTC)? Return on Total Capital (ROTC) is a return on investment ratio that quantifies how much return a company has generated through the use of its capital structure. The ROTC ratio is different from return on common equity (ROCE), as the former quantifies the return a company has made…
What is the Times Interest Earned Ratio (Cash Basis)? The Times Interest Earned (Cash Basis) (TIE-CB) ratio is very similar to the Times Interest Earned Ratio. Times Interest Earned (Cash Basis) measures a company’s ability to make periodic interest payments on its debt. The main difference between the two ratios is that Times Interest Earned…
