Financial metrics
Put numbers in perspective.
One metric rarely tells the whole story. Learn what financial ratios measure and where their limitations lie.
Benchmark
A benchmark is a reference used to evaluate an investment or strategy, often a financial index.
In plain languageCash flow
Cash flow describes cash moving in and out over a period. For companies, it is often split into operating, investing and financing activities.
In plain languageDividend yield
Dividend yield divides the annual dividend per share by the share price.
In plain languageDrawdown
A drawdown is an investment’s percentage decline from a previous peak to a subsequent lower value.
In plain languageDuration
Duration measures the timing of a bond’s cash flows. Modified duration estimates its sensitivity to interest-rate changes.
In plain languageMarket capitalisation
Market capitalisation is a company’s stock-market value: share price multiplied by the number of outstanding shares.
In plain languagePrice-to-earnings ratio (P/E)
The P/E ratio divides a stock’s price by earnings per share. It is a commonly used company valuation metric.
In plain languageTotal expense ratio (TER)
The total expense ratio measures certain ongoing fund expenses relative to its average assets per year.
In plain languageTracking difference
Tracking difference is the gap between an index-tracking fund’s return and its benchmark return over the same period.
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03 / CONNECT THE DOTS
Knowledge that moves you forward.
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