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Aug 17, 2021 · This tutorial provides a comprehensive overview of the current ratio, which is a type of liquidity ratio. In this tutorial, we will learn how to calculate this ratio using a practical example....
- 19 min
- 21K
- WallStreetMojo
The Current Ratio - Interpreting the Ratio. The 2nd video in a series of 4 videos that explains all about the current ratio. In this video we explore the interpretation the current ratio that...
- 4 min
- 821
- Else Grech Accounting
Are you ready to unlock one of the most important tools in financial analysis? In this video, we’re diving into the Current Ratio—a simple yet powerful metri...
- 3 min
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- Stocks & Strategy
- Net Operating Income
- Capitalization Rate
- Internal Rate of Return
- Cash Flow
- Cash on Cash Return
- Gross Rent Multiplier
- LTV Ratio
- Debt Service Coverage Ratio
- Operating Expense Ratio
- Occupancy Rates
NOI tells you how much money you make from a given investment property. It’s a version of a high-level income statement. To calculate it, take your total income and subtract operating expenses. Never include your mortgage payments in the NOI calculation, those are not considered operating expenses. Don’t forget to include income from laundry machin...
Cap rateis the real estate equivalent of the stock market’s return on investment. It’s the ratio between the amount of income produced by a property to the original capital invested (or its current value). It tells you the percentage of the investment’s value that’s profit. Cap Rate divides your net operating income (NOI) by the asset value. When y...
IRR estimates the interest you’ll earn on each dollar invested in a rental property over its holding period. It’s the rate of growth that a property has the potential to generate. The calculation goes beyond net operating income and purchase price to estimate long-term yield. When you calculate IRR, set the net present value (NPV) of the property t...
Cash flow is a sign of how well your business is – or isn’t – doing. It’s your net cash left at the end of the month after you’ve received your rents and paid your expenses. If you rent a building for $2,000 a month, and all costs are $1,200, your net cash flow is $800. You can calculate this metric yourself, or let Stessado it for you.
Cash on cash returntells you the total return on the money you have in your real estate investment. Simply put, it’s how much money you’re earning off your cash invested. It’s an important metric because, unlike other real estate investing metrics, it includes debt service and your mortgage. To get the current return on the total amount of cash in ...
GRM helps investors compare buildings and roughly determine a building’s worth. It’s calculated by dividing the property’s price by its gross rental income. A “good” GRMwill depend on your local market and comparable properties. You can use a projection of gross rental income, or you could ask the current owner for a copy of their rent roll. Since ...
The Loan to Value Ratio measures the amount of leverage on a particular asset. An LTV matters to buyers who financetheir deals as it measures the amount you’ll need to finance against the property’s current fair market value. But, LTV is also the best way to track the equity you hold in a property (not just for financing) but for the value of your ...
Lenders also pay close attention to your Debt Service Coverage Ratio, or DSCR. It compares the operating income you have available to service debt to your overall debt levels. Divide your net operating income by debt payments, on either a monthly, quarterly, or annual basis, to get your DSCR. If you’re applying for a new mortgage, lenders look at y...
A measure of profitability, the OER tells you how well you’re controlling expenses relative to income. Take all operating expenses, less depreciation, and divide them by operating income to get your OER. It’s one of the few ratios used by investors which includes depreciation, which makes it more inclusive of the property costs. You can calculate t...
An unoccupied unit generates no income but still costs you money. Many operating costs remain unchanged even if you have no tenants. Most investors track two historical occupancy rates to keep an eye on open units and lost income.
- 46 min
May 16, 2024 · The Current Ratio provides valuable insights into a company’s liquidity. It’s particularly useful when assessing the short-term financial health of potential investment opportunities.
May 25, 2021 · What Is Current Ratio? The current ratio is a commonly-used financial ratio. It tells investors and analysts whether a company is able to pay its current liabilities with its current assets (typically within a 12-month period).
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Aug 16, 2024 · The current ratio is a liquidity ratio that measures a company’s ability to pay short-term obligations or those due within one year. It tells investors and analysts how a company can maximize...
