Investing Glossary
Plain-language definitions of the financial metrics and Compass concepts Turtleway uses to look at a business.
Metrics
The financial ratios Turtleway shows on a company, and what each one measures.
Gross Margin
What's left of revenue after direct costs to produce the product.
Operating Margin
Profit left after paying for the full operation, before interest and taxes.
Free Cash Flow Margin
Cash left over after running and reinvesting in the business.
Net Margin
Bottom-line profit as a share of revenue.
Earnings Growth
How fast bottom-line profit is expanding year over year.
Stock-Based Compensation Ratio
Share-based pay as a proportion of revenue.
Debt-to-Equity
How much the company borrows relative to shareholder capital.
Current Ratio
Short-term liquidity: can the company cover near-term bills?
Interest Coverage
How easily operating profit covers interest payments.
Return on Invested Capital (ROIC)
How well the business turns invested money into profit.
Return on Equity (ROE)
Profit generated per dollar of shareholder capital.
Return on Assets (ROA)
Profit per dollar of total assets.
Revenue Growth
Top-line sales expansion year over year.
Capital Expenditure Ratio
How much of revenue is reinvested into physical assets.
Dividend Payout Ratio
Share of earnings paid to shareholders as dividends.
Share Dilution
Change in share count over time, and whether existing owners are being diluted.
Price-to-Earnings (P/E) Ratio
What you pay today for each dollar of current earnings.
Price-to-Free-Cash-Flow
Market value relative to actual cash the business produces.
Free Cash Flow Yield
Cash return you're effectively buying at today's price.
Compass concepts
The ten qualities the Turtleway Compass weighs when it looks at a business.
Business quality
Whether the company has a durable edge that protects its profits over time.
Earnings reliability
How steady and cash-backed a company's profits are, year to year.
Balance sheet strength
Whether the company's debts are conservative enough to survive hard times.
Returns on capital
How much profit the business earns on the money invested to run it.
Growth quality
Whether revenue growth is real, profitable, and likely to last.
Capital allocation
How wisely management reinvests profits and returns cash to owners.
Shareholder dilution
Whether your ownership stake is being watered down by new shares.
Business resilience
How well the business holds up through recessions, shocks, and change.
Concentration risk
How dependent the company is on a single customer, product, region, or supplier.
Valuation attractiveness
Whether the price you'd pay is reasonable versus what the business is worth.