<h3 id="heading-financial-analysis-lesson-2-financial-analysis-techniques">Financial Analysis. Lesson 2. Financial Analysis Techniques.</h3>
<ol>
<li>Capital budgeting involves evaluating investment options to optimize long-term gains.
</li>
<li>Payback period calculates the time required to recover initial investment.
</li>
<li>Weighted average cost of capital (WACC) determines a company’s financing cost.
</li>
<li>Free cash flow (FCF) shows available cash after essential expenses are covered.
</li>
<li>The capital asset pricing model (CAPM) estimates expected investment returns.
</li>
<li>Beta coefficient measures a stock's volatility relative to market fluctuations.
</li>
<li>Dividend yield reveals the percentage return based on dividends received.
</li>
<li>Enterprise value (EV) sums market capitalization, debt, and cash equivalents.
</li>
<li>EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) measures core profitability.
</li>
<li>Profit margin represents earnings after costs, indicating operational efficiency.
</li>
</ol>
<hr />
Technical Examples:
<ol>
<li>Using WACC, analysts calculate a minimum acceptable return on investments.
</li>
<li>CAPM assists in assessing the risk-return profile of potential stocks.
</li>
<li>The beta coefficient helps investors understand stock sensitivity to market changes.
</li>
</ol>

### Financial Analysis. Lesson 2. Financial Analysis Techniques.

1. **Capital budgeting** involves evaluating investment options to optimize long-term gains.
    
2. **Payback period** calculates the time required to recover initial investment.
    
3. **Weighted average cost of capital (WACC)** determines a company’s financing cost.
    
4. **Free cash flow (FCF)** shows available cash after essential expenses are covered.
    
5. The **capital asset pricing model (CAPM)** estimates expected investment returns.
    
6. **Beta coefficient** measures a stock's volatility relative to market fluctuations.
    
7. **Dividend yield** reveals the percentage return based on dividends received.
    
8. **Enterprise value (EV)** sums market capitalization, debt, and cash equivalents.
    
9. **EBITDA** (Earnings Before Interest, Taxes, Depreciation, and Amortization) measures core profitability.
    
10. **Profit margin** represents earnings after costs, indicating operational efficiency.
    

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**Technical Examples:**

1. Using **WACC**, analysts calculate a minimum acceptable return on investments.
    
2. **CAPM** assists in assessing the risk-return profile of potential stocks.
    
3. The **beta coefficient** helps investors understand stock sensitivity to market changes.