Revenue is the amount of money that a company actually receives during a specific period. It is the "top line" or "gross income" figure from which costs are subtracted to determine net income.
Gross Margin
The gross margin represents the percent of total sales revenue that the company retains after incurring the direct costs associated with producing the goods and services sold by a company. The higher the percentage, the more the company retains on each dollar of sales to service its other costs
and obligations.
Gross Margin (%) = Revenue - Cost of Goods Sold
Revenue
This number represents the proportion of each dollar of revenue that the company retains as gross profit. For example, if a company's gross margin for the most recent quarter was 35 percent, it would retain $0.35 from each dollar of revenue generated, to be put toward paying off sales, general and administrative expenses (SG&A), interest expenses and distributions to shareholders. The levels of gross margin can vary drastically from one industry to another depending on the business. For example, software companies will generally have a much higher gross margin than a manufacturing firm.
Cash Flow From Operating Activities
An accounting term that indicates money a company brings in from ongoing, regular business activities, such as manufacturing and selling goods or providing a service. Cash flow from operating activities does not include long-term capital or investment costs. It does include earnings before interest (EBIT) and taxes plus depreciation minus taxes.
Also called operating cash flow or net cash from operating activities, it can be calculated as follows:
Cash Flow From Operating Activities = EBIT + Depreciation – Taxes
Capital Expenditure
Capital expenditures, or CapEx, are funds used by a company to acquire or upgrade physical assets such as property, industrial buildings or equipment. It is often used to undertake new projects or investments by the firm. This type of outlay is also made by companies to maintain or increase the scope of their operations. These expenditures can include everything from repairing a roof, to purchasing a piece of equipment, or building a brand new factory.
The amount of capital expenditures a company is likely to have depends on the industry it occupies. Some of the most capital-intensive industries have the highest levels of capital expenditures including semiconductors, oil exploration and production, telecom, manufacturing and utilities.
Cash, Short-Term Investments and Long-Term Investments
This includes bank account cash and marketable securities (e.g., government bonds, corporate bonds and/or securities and money market funds).
Net Income
Net Income is a company's total earnings (or profit). Net income is calculated by taking revenues and adjusting for the cost of doing business, depreciation, interest, taxes and other expenses. This number is found on a company's income statement and is an important measure of how profitable the company is over a period of time.
The measure is also used to calculate earnings per share. This number is often referred to as "the bottom line" because net income is listed at the bottom of the income statement.
Earnings Per Share
This is the portion of a company's profit allocated to each outstanding share of common stock. Earnings per share (EPS) serves as an indicator of a company's profitability.
EPS = Net Income - Dividends on Preferred Stock
Average Number of Outstanding Shares
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