The parameters in the formula are explained as follows:

• :

  The company's after-tax profit for a certain accounting period is the amount remaining after deducting costs and all expenses from revenue. It is a basic indicator for measuring a company's profitability, but it is affected by accounting policies.

• :

  The value of a company's fixed and intangible assets that decreases as they are used or as time passes. Depreciation and amortization are non-cash expenses that, when added back to net income, help more accurately reflect actual cash flow.

• :

  A provision made by a company when the value of an asset is lower than its book value. This is usually a non-cash expense. Adding this back can prevent fluctuations in asset values ​​from interfering with profitability.

• :

  Expenses incurred by the company for the development of new products, technologies, and services. Although they are recorded as expenses in the current period, they are long-term investments and can be considered as the company's future growth potential. Adding this back helps reflect the company's long-term development capabilities rather than short-term profits.

• :

  The income tax expense adjustment caused by the difference between accounting treatment and tax law is a non-cash item. This item is added back to better reflect the actual tax burden borne by the company and avoid the deviation caused by the difference in accounting treatment.

• :

  Capital expenditures made to maintain a company's current operating level and capacity, rather than for expansion or growth. This is subtracted from shareholder earnings to more accurately measure a company's free cash flow, which is what shareholders can actually get.

• :

  The total market value of a company's outstanding shares, equal to the current share price multiplied by the number of shares outstanding. Total market capitalization represents investors' assessment of the company's overall value.