Our Methodology

Definitions

Every definition on Finpendium is written from primary sources. We use CFA Institute curriculum materials, peer-reviewed finance textbooks (Brealey & Myers, Damodaran on Valuation, Hull on Options), FASB accounting standards, and SEC guidance. Investopedia is used only as a secondary reference for plain-language framing — never as the sole source for a definition.

Definitions target a reader who is intelligent but encountering the concept for the first time. We avoid circular definitions ("leverage is the use of leverage") and always explain why the metric matters, not just what it measures.

Formulas and calculators

Every calculator formula is implemented as a named function in our codebase and covered by automated tests with known input/output pairs. Before a calculator reaches the site, it must pass every test case — including edge cases such as division by zero, negative inputs, and invalid data.

We use the standard formulas as defined in CFA Institute equity and fixed income curricula, cross-referenced against Damodaran Online where applicable. When multiple industry conventions exist for the same metric (e.g. trailing vs. forward P/E), we note the convention used and explain the difference.

Calculators run entirely in your browser. No input values are sent to any server.

Worked examples

Every calculator term includes a worked example using real, publicly available financial data. Sources include:

• SEC EDGAR filings (10-K, 10-Q, DEF 14A)
• Company investor relations pages
• Federal Reserve Economic Data (FRED)
• Bureau of Labor Statistics (BLS)
• IMF and World Bank publications
• IRS publications (for tax-related formulas)

The source is cited and linked on each term page. We do not fabricate example numbers. If a real-world example for a term is difficult to source cleanly, we use a clearly labelled hypothetical with a note explaining why.

Data freshness

Financial data changes. A P/E ratio worked example using Apple's FY2024 figures will become outdated as new filings are published. We note the reporting period on every example and update examples on a best-effort basis. The Last updated date on each term page reflects when the content was last reviewed.

We do not pull live market data. All numbers on the site are point-in-time figures from cited filings. Do not use example values as current market data.