What’s it: Company funding is an injection of money from funders to companies. Sometimes, we also refer to it as corporate financing. In general, two sources of funding: equity and debt. We refer to equity funders as stock
Finance
Operating Leverage: Why It Matters, How to Calculate it
What's it: Operating leverage shows you the extent to which a company's operating costs are dependent on fixed operating costs. If the company has high leverage, it shows that the company has a significant proportion of fixed costs.
Sovereign Wealth Funds: Purposes, Source of Funds, Top-10 Lists
What's it: Sovereign wealth funds (SWFs) is a state-owned investment fund. The allocation may be in real assets or in financial assets such as stocks, bonds, and real estate. It is a pooled investment vehicle in global financial
Cross-Border Listing: Meaning, Examples, Pros, and Cons
What's it: Cross-border listing is the listing of company shares in a country other than its origin. When a company lists its shares in two different countries, we call it a dual listing. Dual listings create arbitrage opportunities,
Spot Market: Meaning, Features, Examples, Advantages
What's it: Spot market is a market in which trading takes place for immediate delivery. Examples of spot markets are the market for securities, commodities, and foreign exchange (forex). Ideally, delivery takes place a few seconds after
Option: Meaning, Characteristics, Types, How it Works, Examples
What's it: An option is the right to buy or sell a certain number of commodities, currencies, or securities on a specific date for a specified price. Traded options can be bought or sold at any time on any exchange, in contrast to
Acid Test Ratio: Meaning, Formula, Calculation
What's it: The acid test ratio is a liquidity ratio to measure whether a company has sufficient cash to cover current liabilities using its liquid assets. First, we add up cash and cash equivalents, short-term investments, and accounts
Shadow Banking: Meaning, How It Works, Pros and Cons
What's it: Shadow banking is intermediary financial activities but is not subject to the banking system's regulatory oversight. They usually take other parts of the financial system, which commercial banks are neither allowed nor
Return on Invested Capital (ROIC): Calculation and Interpretation
What's it: Return on invested capital (ROIC) is a profitability ratio to measure how much profit is generated for every dollar invested in the company. We calculate it by dividing net income by the total invested capital,
Cash Flow From Operating Activities: Components, Importance, Calculation
What's it: Cash flow from operating activities is the incoming and outgoing money related to daily operation. Its examples include sales revenue, production expenses, employee salaries, marketing expenses, and general and
Accounting Cycle: Meaning, and Stages
What's it: Accounting cycle refers to the set of processes for identifying, analyzing, and recording accounting events. The cycle starts with identifying transactions and ends with entering these transactions in the financial
Altman Z-Score: Concept, Model, Formula, Criticism
What's it: Altman Z-score is a multivariable formula for measuring a company's potential bankruptcy. It is a function of the five financial ratios: profitability, leverage, liquidity, solvency, and activity ratios. The calculations
J-Curve: Meaning, Concept and How it Works
What's it: J-curve is a graph shaped like a letter "J." It is a two-dimensional graphic representation to show the relationship between two variables. The curve is popular in international trade and private equity funds. In this
Annuity: Meaning, Types, How to Calculate It
What's it: Annuity is a way of payment or receipt periodically over a certain period. Various financial products use this concept, for example, insurance policies, pension fund benefits, and bank loan interest. For example, in insurance,
Barter Transaction: Meaning, Examples, Accounting, Pros, Cons
What's it: A barter transaction refers to exchanging goods for goods without involving money as an intermediary. However, sometimes, transactions can also involve services, be it services with goods or services with services. One form
Bear Market: Causes, and Investing Strategies
What's it: A bear market refers to a capital market experiencing a period of decline in performance. Bear is a term applied to an investor who is pessimistic about a particular security price prospect. Such a downturn in the market we