Fixed Income Metrics

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Our company models provide two versions of Fixed Income metrics:

(1) Traditional metrics use unscrubbed accounting data from the firm’s reported financials.

(2) Adjusted metrics use our scrubbed data, which adjusts for 30+ accounting loopholes.

See below for the Fixed Income metrics available in our models and their calculations.

Traditional Metrics

  1. Debt net of Cash – a liquidity ratio calculated by taking a company’s debt minus its cash.
  2. Interest Coverage Ratio – a profitability ratio that shows how easily a company can pay their interest.
  3. Debt to Equity Ratio – a financial leverage ratio that shows how much of a company is funded in debt versus equity.
  4. Debt to Capital Ratio – a financial leverage ratio that shows how much of a company's capital is funded by debt.
  5. Debt net of Cash per EBITDA – a leverage ratio that shows how many years it would take a company to pay back its debt if net debt and EBITDA are constant.
  6. Debt net of Cash Per FCF –a coverage ratio that shows how much debt a company has per free cash flow.
  7. Current Ratio – a liquidity ratio that measures a company's ability to pay short-term obligations.
  8. Quick Ratio –a liquidity ratio that measures a company's ability to pay short-term obligations with its most liquid assets.
  9. Debt Service Coverage Ratio –a measure of cash flow available to pay current debt obligations.
  10. Asset Turnover Ratio – an efficiency ratio that measures how much revenue a company generates from its assets.
  11. Fixed Asset Turnover Ratio – an efficiency ratio that measures how much revenue a company generates from its fixed assets.
  12. Equity Multiplier – a leverage ratio that shows how much of a company's assets are financed by equity.
  13. Tangible Net Worth – The value of a firm's tangible assets.
  14. Debt per Tangible Net Worth – a leverage ratio that shows how much a company's tangible assets are financed by debt.
  15. Basic EPS Growth per EBIT Growth – a ratio that shows that how much earnings per share changes per change in earnings before interest & tax.
  16. FFO per Total Debt – a leverage ratio for REITs that shows how much free cash flow is available to cover debt obligations.
  17. FFO per Total Interest Expense – a liquidity ratio for REITs that shows how much free cash flow is available to cover interest expense.
  18. Asset Coverage Ratio – a solvency ratio that measures how well a company can repay its debt by selling its tangible assets.
  19. Cash Ratio – a liquidity ratio that measures a company's ability to pay short term obligations with its cash.

See Figure 1 for the formula behind each of these metrics.

Figure 1: Traditional Fixed Income Metric Calculations

Sources: New Constructs, LLC

Adjusted Metrics

  1. Debt net of Cash – a liquidity ratio that takes the fair value of a company's debt plus the present value of its operating leases minus its excess cash.
  2. Interest Coverage Ratio – a profitability ratio that shows how easily a company can pay their non-operating interest.
  3. Debt to Equity Ratio – a financial leverage ratio that shows how much of a company is funded in debt versus equity. The adjusted version accounts for all debt, including hidden debt such as operating and finance leases.
  4. Debt to Capital Ratio – a financial leverage ratio that includes all debt that a company has, including hidden debt.
  5. Debt net of Cash per EBITDA – a leverage ratio that shows how long it would take a company to pay back its debt if net debt and EBITDA are kept constant.
  6. Debt net of Cash per FCF – a coverage ratio that shows how much debt a company has per the free cash flow it generates.
  7. Current Ratio – a liquidity ratio that measure's a company's ability to pay back its short-term obligations. Adjusted current assets includes all reserves and required cash.
  8. Quick Ratio – a liquidity ratio that measures a company's ability to pay short-term obligations with its most liquid assets. Adjusted current assets includes all reserves and required cash.
  9. Debt Service Coverage Ratio – a coverage ratio that shows how easily a company can pay its debt obligations.
  10. Asset Turnover Ratio – an efficiency ratio that measures how much revenue a company generates from its assets (a 2-year average).
  11. Fixed Asset Turnover Ratio – an efficiency ratio that measures how much revenue a company generates from its fixed assets (a 2-year average).
  12. Equity Multiplier – a leverage ratio that shows how much of a company's assets are financed by equity.
  13. Tangible Net Worth - The value of a firm's tangible assets.
  14. Debt per Tangible Net Worth – a leverage ratio that measures how much debt was used to finance a company's tangible assets.
  15. Basic EPS Growth per EBIT Growth – a ratio that shows how much EPS is affected by change in EBIT.
  16. FFO per Total Debt – a liquidity ratio for REITs that measures how much free cash flow (FFO) is available to cover its debt obligations.
  17. Asset Coverage Ratio – a solvency ratio that measures how well a company could repay its debt by selling its assets in a liquidation.

See Figure 2 for the formula behind each of these metrics.

Figure 2: Adjusted Fixed Income Metric Calculations

Sources: New Constructs, LLC

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