ROCE(Return on Capital Employed)
ROCE = profit after tax + interest earned on investment in long term funds by the company
Higher the ROCE , better is the company.
ROE(Return on Equity)
ROE = Profit After Tax/Shareholder funds.
Higher the ROE, better.
Last 10 years sales growth
Compare the growth percentage with the industry average to figure out if the company is a underperformer or outperformer
Free Cash Flow:
Free Cash Flow = Operational profit - capital expenditure.
Higher the free cash flow, better is the company.
Debt/Equity Ratio = Debt used for business/equity capital used for business
Ratio of > 2 is risky.
Working capital = Cash needed to run daily business.
Higher (Sales/Working capital) is a good sign.
Net profit Margin = Net Profit/Sales.
Higher margin, better prospect.