Metrics, Ratios, and Valuation

After you’ve assembled the necessary financial data, the obvious next step is to do something useful with that data. Effective analysis of financial data requires a repertoire of different formulas, metrics, and ratios, all of which convey different information. Not every metric is appropriate for every company. For purposes of the Series 79 exam, you should memorize these ratios and metrics, understand how to derive them, and know what they are intended to measure.

There are a few things to keep in mind when dealing with these formulas and ratios. First, these metrics are non-GAAP (generally accepted accounting principles) measures, which means that there is no “official,” standard