Capital expenditures as a percentage of total assets, measuring investment intensity

The cash flow remaining after covering operating expenses and capital expenditures, used to meet debt obligations within a year, including principal and interest payments

Comprises companies with expected returns exceeding the median but falling below the third quartile (75th percentile) of the EDHECinfra universe

Consists of companies with expected returns below the median of the EDHECinfra universe

The investor’s required return for holding a senior debt investment, equivalent to the yield to maturity

The return an investor expects for holding equity, also known as the expected return or equity discount rate

The difference between a debt instrument’s yield to maturity and the risk-free rate of a comparable maturity instrument

The rate used to calculate the present value of future cash flows in discounted cash flow (DCF) analysis

A valuation model that forecasts future cash flows and discounts them to their present value to determine a company’s worth

Analysis isolating the impact of individual DCF components (cash flows, risk premia, interest rates)

The year-over-year change in dividends paid to equity investors

The ratio of dividends to cash flow available for debt service

The proportion of free cash flow to equity (FCFE) paid out as dividends, also known as the free cash flow payout ratio

Dividends as a percentage of total revenue, indicating the portion of revenue returned to equity investors

The modified duration of an infrastructure segment based on underlying companies’ cash flows and discount rates

Operating income as a percentage of revenue, measuring core business profitability

A measure of a company’s financial performance, reflecting earnings before the deduction of interest, taxes, depreciation, and amortization

A metric measuring diversification within an infrastructure segment

The excess return expected from an equity investment over the risk-free rate

A measure of a company’s economic value, often used in acquisitions, calculated as market capitalization plus debt, minus cash

A valuation multiple comparing enterprise value to EBITDA, useful for comparing companies within an industry

The cash flow available to equity holders after all expenses and debt obligations are met

Debt with a fixed interest rate throughout its term

Debt with a variable interest rate that adjusts periodically based on a benchmark rate

Debt with interest and principal payments linked to an inflation index

Capital expenditures divided by total assets, used in asset pricing models

Debt with a low default risk (probability below 05%)

The maximum loss from peak to trough before reaching a new peak, indicating downside risk

The middle segment of the market based on market capitalization (between the 33rd and 66th percentiles) in the EDHECinfra universe

The differences between observed and estimated values in a regression model, ideally following a normal distribution

(Total debt minus cash) divided by shareholder equity, measuring leverage adjusted for cash

Net income as a percentage of revenue

Net operating income (revenue minus operating expenses) as a percentage of total assets

Companies with expected returns above the third quartile (75th percentile) of the EDHECinfra universe

A ratio comparing market value to book value of equity, reflecting investor sentiment

Market capitalization divided by annual revenue, showing the market’s valuation of each dollar of sales

The degree of correspondence between estimated prices and actual secondary market transactions

Return on assets before tax, used in asset pricing models

Cut points dividing a probability distribution into intervals with equal probabilities

“Representative” means that the data “accurately reflects the characteristics, distributions, and patterns of the entire population from which it is drawn.”

The opposite of “representative data” is “biased data” or “non-representative data.” This type of data does not accurately reflect the characteristics, distributions, and patterns of the entire population from which it is drawn, leading to skewed or invalid conclusions.

Annual changes in revenues of underlying companies

The return on an investment with zero risk, typically estimated using government bond yields

Net income divided by total assets

Robust means that the data “remains reliable, accurate, and valid under a wide range of conditions and assumptions. It is characterized by its ability to withstand and provide consistent results despite potential variations, errors, or uncertainties in the data collection process.”

The opposite of “robust data” is “fragile data” or “non-robust data.” This type of data is susceptible to inaccuracies, inconsistencies, and biases, making it unreliable and potentially misleading for analysis and decision-making.

Operating profit divided by capital employed, measuring profitability and capital efficiency

Net income divided by shareholder equity

Net operating profit after tax divided by invested capital

The relationship between a variable and its lagged values, potentially indicating risk underestimation in time series data

Total assets of companies in a segment, used as a risk factor in asset pricing models

A Systematic Risk Profile is a combination of risk factors found at the asset level that define the exposure (beta) to common sources of risk (and therefore of market price level) of investments in infrastructure or private equity, such as size, leverage or profits.

When building comparables, taking the Systematic (factor) Risk Profile of the asset into account ensures a genuinely comparable metric, which is never available by looking at raw data since recent transactions or public comps almost never represent the same risk exposures as the asset or portfolio of interest.

The difference between long-term and short-term interest rates, used in asset pricing models

A TICCS/PECCS Profile is simply a combination of TICCS or PECCS pillars corresponding to given asset, portfolio or strategy. For example, Contracted Project Financed Roads correspond to a TICCS Profile (BR01-CS01-IC6050). Building a TICCS or PECCS Profile is a first step towards using infraMetrics or privateMetrics in a customized manner. The notion of TICCS or PECCS profile is used repeatedly in our documentation and use cases.

Using TICCS or PECCS is a first recognition of the systematic nature of markets: asset that are more alike (within segments) share a common price driver and vice versa i.e., TICCS or PECCS discriminate between different market price levels.

Ratios relating market value to financial metrics (eg, P/E, P/B), used to assess investment potential

A risk measure indicating the potential loss with a given probability over a specified time horizon

The average cost of a company’s financing, calculated as the weighted average of debt and equity costs

The annual return on a debt instrument held to maturity, also the discount rate for future payments