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If you understand these 20 finance formulas, you're already ahead of most investors. Finance isn't about memorizing numbers. It's about understanding what those numbers are telling you. Here are some of the most important formulas every investor, finance student, and analyst should know: 📈 Valuation • Present Value (PV) • Future Value (FV) • Net Present Value (NPV) • Weighted Average Cost of Capital (WACC) • Capital Asset Pricing Model (CAPM) 📊 Profitability • Earnings Per Share (EPS) • Return on Equity (ROE) • Return on Assets (ROA) • Return on Investment (ROI) • EBITDA 💰 Valuation Ratios • Price-to-Earnings (P/E) • Enterprise Value (EV) 🏦 Financial Health • Debt-to-Equity (D/E) • Current Ratio • Quick Ratio • Interest Coverage Ratio ⏳ Investment Analysis • Payback Period • Dividend Yield • Sharpe Ratio • Beta (β) The biggest mistake many beginners make is focusing only on P/E Ratio. Great investing comes from looking at a combination of profitability, valuation, leverage, liquidity, and risk. You don't need to memorize every formula. But you should know: What each metric measures When to use it And more importantly, when not to use it. That's what separates someone who reads financial statements from someone who truly understands a business. Which finance metric do you use the most while analyzing a company? Download this Top Finance Cheat Sheet - lnkd.in/d5RUkx4H Mega Finance Cheat Sheet- lnkd.in/dcUTSJBu

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EBITDA is one of the most talked-about metrics in investing. But what does it actually tell you? Many investors look only at Net Profit. Professional investors also look at EBITDA because it shows how the core business is performing before financing and accounting decisions come into play. Think of the income statement like this: 📈 Revenue The total sales generated by the business. ⬇️ Operating expenses are deducted. 💰 EBITDA This shows the operating profit before Interest, Taxes, Depreciation, and Amortization. ⬇️ Deduct Depreciation & Amortization. 📊 EBIT Operating profit after accounting for the wear and tear of assets. ⬇️ Deduct Interest. 🏦 Deduct Taxes. ✅ Net Income The final profit available to shareholders. Why do analysts use EBITDA? • It focuses on the operating performance of the business. • Makes it easier to compare companies with different debt levels and tax structures. • It is widely used in valuations, especially the EV/EBITDA multiple. • Commonly used in investment banking, private equity, and equity research. But EBITDA has limitations. It is not cash flow. It ignores capital expenditure requirements and changes in working capital, so a high EBITDA doesn't always mean strong cash generation. That's why experienced investors never rely on EBITDA alone. They look at it alongside Operating Cash Flow, Free Cash Flow, Net Profit, and Return on Capital to get the complete picture. What's your preferred profitability metric when analyzing a business: EBITDA, EBIT, or Free Cash Flow? Grab the Free EBITDA Guide Here - lnkd.in/du25cXPk

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A valuation report is much more than a target price. It explains what a business is worth and why. When reading one, focus on these 7 sections: • Executive Summary – Target price, fair value, and recommendation. • Business Overview – Business model, industry, and competitive advantage. • Financials – Revenue, margins, profit, cash flow, ROE/ROCE, and debt. • Valuation Method – DCF, P/E, EV/EBITDA, or comparable companies. • Key Assumptions – Growth, margins, discount rate, and future projections. • Risks – What could cause the valuation to go wrong. • Current Price vs Fair Value – Check if there's a real margin of safety. Remember, a target price is only as good as the assumptions behind it. The best investors don't just read the conclusion. They understand the logic behind it. What do you look at first in a valuation report? Get this Guide for Free How to analyze Financial Statements lnkd.in/deRZAcr6

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