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How to Value a Startup

By Andrew Stotz

This story started when Dan, a podcast listener, replied to my recent weekly email with this question, “How do you value a startup, especially if there is no revenue?”

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what is return on equity

What Is Return On Equity?

By Andrew Stotz

ROE is another method to measure the profitability of a company. The ROE divides the net income of a company with the shareholder’s equity.

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what is return on invested capital

What Is Return On Invested Capital?

By Andrew Stotz

Return on invested capital is a method of calculation in which you measure the performance of a company in terms of profitability.

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what is ebit return on assets

What Is EBIT Return On Assets?

By Andrew Stotz

EBIT return on asset measures the firm’s earnings before interest and tax with respect to the firm’s total asset. The main focus on this ratio is the income and the total asset.

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what is ebit margin

What Is EBIT Margin?

By Andrew Stotz

EBIT margin stands for Earning Before Interest and Tax margin. This margin helps stakeholders understand the cost of running the firms as well as profitability.

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what is gross profit margin

What Is Gross Profit Margin?

By Andrew Stotz

The gross profit margin compares the difference between the revenue and cost of goods sold, against revenue. It is represented in the form of a percentage and is used to evaluate the company’s financial health.

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what is cash conversion cycle

What Is Cash Conversion Cycle?

By Andrew Stotz

The amount of time it takes a firm to convert its inventory into cash is known as the cash conversion cycle. In other words, it is the time taken for firms to convert their resources into cash.

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what is payables deferral

What Is Payables Deferral?

By Andrew Stotz

The period of time a firm takes to pay back their suppliers or creditors for their material purchases is known as payable deferral.

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what is receivables collection

What Is Receivables Collection?

By Andrew Stotz

The receivable collection period is a period when a firm receives the amount owed by their customers.

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what is inventory conversion

What Is Inventory Conversion?

By Andrew Stotz

The inventory conversion period is the timeframe that encompasses the process of obtaining the raw materials, manufacturing, to selling the product. It helps the firms estimate the timespan between the day raw materials are bought to the day the product is sold.

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