The main source of finance for companies is equity finance. Companies raise equity finance by issuing shares of the company to investors. To buy these shares, investors must pay a price, which is the market value of the share at the time of issuance. All shares of a company have a par value, that is […]
HOW TO CALCULATE SHARE PRICE AFTER BONUS ISSUE? Read More »
Introduction Working Capital Management tends to be one of the most crucial impacts on the business because it impacts the company’s liquidity position. This is an increasingly important metric for the company because of the reason that it ensures that they can meet their day-to-day operational expenses in a smooth matter. Working capital directly reflects
How Does Reduction Of Working Capital Help The Company Improve Their Cash Flows? Read More »
The interest rate parity is a theory that suggests a link between the interest rates in two countries and the difference between the spot rate and forward rate of the currencies of the two countries. It suggests that the difference between the forward exchange rate and spot exchange rates of two countries after a specific
4 LIMITATION OF INTEREST RATE PARITY – EXPLAINED Read More »
Interest rate parity is a theory to predict forward foreign exchange rates. These foreign exchange rates are predicted based on the hypothesis that the interest rate differential between two countries should offset the forward exchange rate and the spot exchange rate. Interest rate parity describes an ideal situation where the two countries spot and foreign
What is Interest Rate Parity? Definition, Formula, and Example Read More »
There are many sources of finance a business can obtain to fund its business activities. This finance can be obtained from sources like equity financing or debt financing. Most of the time, these sources of finance are external and may come with some conditions. However, sometimes finance can also be generated from within the business.
ADVANTAGES & DISADVANTAGES OF INTERNAL FINANCING Read More »
The Capital Assets Pricing Model is a finance tool that can be used to derive the cost of capital of a company. It is a tool widely used by companies to find their cost of capital for their equity and debt instruments. Investors also use this tool to find the expected rate of return of
7 Advantages of Capital Assets Pricing Models (With Explanation) Read More »
Introduction The Capital Asset Pricing Model can be referred to as a tool that describes the existing relationship between systematic risk and expected return for assets, including stocks. It is used in the field of finance in order to price securities that have a higher risk profile, in addition to generating expected returns for assets,
What are Capital Assets Pricing Models? Overview, Formula, Example Read More »
Business Risks can be defined as factors that a business faces because of the risk of the business failing or losing out on its profitability. Businesses must be aware of these risks because they need to create a proper hedging strategy to help them with these particular risks, to ensure that they can sustain themselves
4 Main Types of Business Risks – Explained Read More »
Introduction In order to finance operations, a business has two main options, equity or debt. The mixture of equity and debt finance is referred to as the Capital Structure of the company. As a matter of fact, it can be seen that capital structure is taken very seriously by companies because it has a huge
Why Would A Company Choose Equity Financing Over Debt Financing? Read More »
The Weighted Average Cost of Capital (WACC) is the required rate of return on a business organization. A business organization usually compares a new project’s Internal Rate of Return (IRR) against the organization’s WACC. So, WACC is the minimum rate for an organization to accept an investment project. Despite many advantages, the WACC has many
Limitations of the Weighted Average Cost of Capital Read More »
