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.

The quick ratio is a liquidity ratio that measures a firm’s ability to pay its short term liabilities with its most liquid assets.

The Gordon growth model, or GGM, is used to calculate the intrinsic value of a stock from future dividends. The model only works for companies that pay out dividends, which have a constant growth rate.

The optimal capital structure of a firm is the right combination of equity and debt financing. It allows the firm to have a minimum cost of capital while having the maximum market value.

To compensate for the risks that shareholders take, firms pay them in return. The theoretical return the firm pays its shareholders is known as the cost of equity. In other words, the cost of equity is the rate of returns a firm pays to its shareholders.

The assets to equity ratio allow you to understand to what extent a business is funded by equity or debt.