Understanding Financial Terminology

\[Gross\ Profit\ = Total\ Sales\ -\ Material\ cost\ and\ all\ direct\ expenses\]
OPM - i.e. EBIT
- Total sales - (All Direct expenses+Factory overheads + Office and administration expenses + sales & distribution expenses)
- Also called EBIT i.e. Earnings before interest and income Tax
- Operating Profit Margin
EBITDA
- Total Income - (All Expenses except interest on borrowings, depreciation, Income Tax, and amortization)
EBT/ PBT
- Total Income - Total Expenses excluding only tax
- Total expenses include Deprecation, Amortization, and interests
PAT
- Profit After payment of income tax
Current Assets
- Receivables + Inventory + Short term investments + Short term loans and advances given + Cash & Bank Balance
Current Liabilities
- Creditors (Payables)+ Short term payables + short term borrowings
Gross Working Capital
- Total of current assets …... Business has invested this amount for short term
Net Working Capital
- Total Current Assets - Total Current Liabilities
Total Capital Employed
- (Total Assets - Current Liabilities) OR it is (Capital + Reserves & surplus + Long term Borrowings)
Net Worth
- Total assets - Total Liabilities OR Capital + Reserves and surplus
Market Capitalization OR called as Market Cap
- Total equity shares of the company Multipled by current Market price of a share