The capital gains yield (CGY) formula calculates the change in stocks’ (or other securities) prices over a given time period. CGY formula doesn’t take into account any dividends and is based only on stock price appreciation. CGY should be analysed before making a decision whether to buy shares … Read More about Capital Gains Yield Formula

## Present Value of Growing Annuity Formula

The present value of a growing annuity formula calculates the current, present day, value of a series of future periodic payments that are growing at a proportionate rate. Put simply, a growing annuity is a series of payments that increase in amount with each payment. The payments are made … Read More about Present Value of Growing Annuity Formula

## Debt Coverage Ratio Formula

The debt coverage formula ratio describes a company’s ability to generate enough net operating income to cover the expense of debt. The higher the ratio, the easier is to service the debt. Debt coverage ratio can be used to analyse companies, projects, or individual borrowers. How to calculate … Read More about Debt Coverage Ratio Formula

## Present Value of Growing Perpetuity Formula

The present value of growing perpetuity formula is used to derive the present value of a series of cash flows that are generated by an investment in the future. These payments are expected to be made on predetermined future dates and in predetermined amounts. For example, if the rate of growth is … Read More about Present Value of Growing Perpetuity Formula

## Total Stock Return Formula

The total stock return formula calculates an internal rate of return of a stock to an investor during the holding period of this investment. The total stock return for shareholders measures shareholder’s earnings, taking into account changes in stocks’ prices (capital gain) plus dividends paid … Read More about Total Stock Return Formula

## Real Rate of Return Formula

The real rate of return formula calculates the annual return on an investment that takes inflation into account. Adjusting nominal rate of return to price changes on the market allows evaluating the effective return on the investment. How to calculate real rate of return? For a quick … Read More about Real Rate of Return Formula

## Earnings per Share Formula

The earnings per share formula (EPS) is a measure of a company’s profitability. EPS is a financial indicator that shows how much profit a company has generated per one common stock. This is one of the most popular indicators in the fundamental analysis, which is calculated by dividing the net … Read More about Earnings per Share Formula

## Debt to Equity Ratio Formula

The debt to equity ratio formula compares a company’s total debt to total equity. In other words, it shows a relation between a percentage of company’s assets financed by creditors and percentage of assets financed by investors. This ratio informs about the level of indebtedness of the company's … Read More about Debt to Equity Ratio Formula

## Risk Premium Formula

The formula for risk premium, also known as default risk premium, calculates the difference between the expected rate of return on investment and the risk-free rate. It is additional compensation that investors expect from an investment based on its level of risk. Risk premium is a measure that … Read More about Risk Premium Formula

## Return on Investment Formula

Return on investment (ROI) is a financial ratio between net profit and cost of investment that describes the efficiency of an investment. As a simple method, ROI is mainly used at the initial stage of analysing the profitability of a project. It is used to compare company’s profitability and to … Read More about Return on Investment Formula