For an individual deciding to invest his savings, the decision on where to invest is quite tricky. He may choose to invest in shares, bonds, stocks, and many other options. However, for a new investor, choosing the bond option is beneficial as no expert analysis is required for it, and being definite investments, it carries …
Definition Convertible debts are a type of hybrid security instrument that has the same features as normal debts such as interest payments but also comes with the option to be converted into common equity shares of a company. The option to convert the debt to common equity shares lies with the debt holder or the …
What is Convertible Debt? Definition, Example, Types, and Component Read More »
Definition A company’s weighted average cost of capital is the cost of all its equity and debt instruments proportionately weighted. These instruments may include common shares, preferred shares, and debt instruments of a company. The cost of capital is the required rate of return of a company on any project. The cost of capital of …
What is the Weighted Average Cost of Capital (WACC)? Definition, Formula, and Example Read More »
Definition: Preference shares, also known as preferred stock, are preferred over ordinary or common shares. This preference is given when a company pays dividends. Preference shares are also preferred to common shares when a company is liquidated, but a company’s liquidation occurs in rare cases. The majority of preference shares also have a pre-determined amount …
How Many Types of Preference Shares? Definition, 5 Types, More Read More »
Definition: Retained earnings are profits or earnings of the business that have been kept for business use and not distributed to the owners or stockholders. In other words, retained earnings are accumulated earnings of a business after paying dividends or drawings to its stockholders or owners. Retained earnings can also be accumulated losses of the …
What are Retained Earnings? Definition, Formula, and Calculation Read More »
Introduction During the normal course of business, there are multiple scenarios requiring business owners to decide about finance. Even though there are numerous different options available to raise finance, it can be seen that there are two broad categories of raising finance for the company, which can be referred to as equity financing and debt …
Equity Financing Vs Debt Financing: Main Different With Explanation Read More »
Definition Operational Gearing can define the relationship between the company’s fixed costs and the variable costs. In this case, fixed costs can be defined as the company’s costs regardless of the output that they are operating at. On the other hand, as far as variable costing is concerned, these are the costs that fluctuate with …
What is Operating Gearing? Definition, Analysis, Example, and Usages Read More »
Definition Replaceable value can be referred to as the cost of replacing an asset in the case where it needs to be replaced because it has been damaged or destroyed. In other words, it is simply the cost that would be incurred to replicate and duplicate the asset in the case where it needs to …
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The dividend growth rate of a stock is the percentage of annual growth of its dividends that it has gone over a period of time. This growth rate can be a decisive factor for investors looking to invest in stocks. Companies try to increase the dividend they pay to investors annually to keep their stockholders …
What is the Dividend Growth Rate? Importance, Usages, and Calculation Read More »
Investors need to determine a stock’s value before investing in a company’s stock. By using proper equity valuation methods, investors can find the fair value of a stock. The fair value of the stock is not the real worth of the stock but an estimate of what the stock is actually worth. The fair value …
What is Equity Valuation? Definition, Importance, and Process (with 4 Steps) Read More »
