Once we have the key numbers for Dr. Pepper, we can now look at the financial ratios And there are three main groups of ratios that we look at. The first are profitability ratios, which looks at how much profit the firm is making each dollar of revenue. And we also have growth rates. And growth rates are very, very important when we come to valuation because that's one of the key differentiators in what multiple a firm trades at. And we will use the growth in the recurring revenues to make sure any non-recurring items are stripped out. Gross margin, we can just copy to the right EBIT margin and EBITDA margin. EBITDA margin's probably the most important because it strips out the effect of acquisitions which create lots of additional depreciation and amortization. So that's probably a key metric in terms of our margin and revenue growth as well. When we come to valuation, we've also got a net operational profit after tax, which are just EBIT times 1 minus the tax rate. And that's one of the reasons why we had the tax rate included above at the top. And then we have invested capital. Invested capital is one of the key metrics which will compare to NOPAT. And in this case, investor capital is the net debt plus shareholders equity line items. Because it's the capital that external investors, third party investors, both on the debt side and the equity side given to the business, we subtract cash. Cash generates interest income, which is not included in operating profit. So therefore we obviously don't want to include it in the denominator and that will give us a return. And that return investor capital is what we'll compare to the cost of capital because the return is what investors get. The cost of capital is what they expect. If we come down to asset efficiency, asset efficiency ratios focus on how well the company is managing its assets and in the case of working capital line items, how quickly they turn over. So the receivable days is a good metric of how long it takes to get paid by customers. So the lower the number, the better. Inventory days, again, this is measuring the amount of time it takes to convert raw material into the end product and deliver it to the customer. So the more efficient your manufacturing process, the shorter your inventory days. So we would like to have a smaller number relatively for inventory days. And then payable days is how long it takes you to pay your suppliers. because if you are a good negotiator and you have a dominant position in an industry, you would normally expect to see your payable debt ratio be higher. And you can see here In this sector the person or the firm were the biggest payable days is Coca-Cola. It's by far the largest player and that's probably why it's got the largest payable days. Operating working capital. This gives you a sense of how much cash is tied up in working capital reached dollar of sales in this industry, most of the players, with the exception of Monster, have a negative working capital. And what that means is they're paying their suppliers after they have received cash from their customers. And then there are a few other metrics of just how efficient they are with the amount of PP&E per dollar of sales, CapEx as a percent of revenue, and then how much they're reinvesting in their assets, their CapEx compared to how much they are depreciating their assets. And then we've got revenue over investor capital, which is another metric. So that's the asset efficiency ratios. Leverage ratios are a way of establishing the indebtedness of the company comparatively. A straightforward one is debt divided by equity. So if your debt is equal to equity, this would be one times or a hundred percent. Probably more intuitive is to have debt developed by debt plus equity. So this gives you a kind of percentage of debt in your financing structure. So in this case for Keurig Dr. Pepper in 2023 it's around 40% or 0.4 times. So 40% of the capital is provided by debt holders. 60% is provided by equity holders and that's called it a nice metric. We can also use net debt and you'll find the rating agencies use both gross and net items. In some industries that have a lot of cash on a regular basis, you probably better it off for using net debt, but in others it's actually better to use gross debt. So it kind of depends on the industry, those metric. And you can either do it by net debt over equity or net debt divided by net debt plus equity. A key metric is your debt is multiple of EBITDA. This is very important. This is mostly how we think about leveraging finance is EBITDA multiples. A very high multiple is about six times. For a publicly traded company, normally you would expect it in the range of up to two to three times. Sometimes very stable. Industries can push ahead of that and still maintain an investment grade credit rating. But if you are hitting things like four times, five times over the long term, you probably won't have an investment grade credit rating. And another metric is EBITDA of interest expense, less important because interest rates historically and the recent history have been very low, but it is becoming more important and it as interest rates rise.