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Investing in Gold (I)
I will not be the first, and probably also will not be the last, who spoke about the Gold Rush that shakes down the world for the last few years. Just in this time it is a little different than in the days when desired f
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Investing in Gold (II)
The upper limit of the price is even more difficult. In our times gold is not founded in streams as was shown in the movies. Now gold is mined from the deep earth and separated from gold dust, metal ore or rock. In natur
http://www.investingforbeginners.eu/investing_in_gold_ii-p0-i5
Investing in Uncertain Period
Investing always has some uncertainty, but there are some situations when rise even more questions than usually. The current situation is just like one of those uncertain periods. When the economic cycle so inconclusive,
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Investing in Russia
Investing in Russia has gotten really widely promoted for the last period. I can remember the talks that stocks in Russia are the cheapest over the world for not less than year. The fact, that those stocks are st
http://www.investingforbeginners.eu/investing_in_russia-p0-i9
Investment in Bulgaria
Starting from the very beginning I will try to make clear why I am bullish about investing Bulgarian stock market. At first I would suggest to look at the chart below. Five year Bulgarian stock market in
http://www.investingforbeginners.eu/investment_in_bulgaria-p0-i10
What to Do With Investments in Current Turbulence?
The question is really not an easy one. The problem is that there is no left any good investments on this world. Let’s looks at the most topical investments classes: Stocks. Even before
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Investing in Land - Agricultural REITs
Investing in land I have noticed an increased interest in agricultural land investments during the last period. And I can it understand completely. When stocks are so volatile and bonds may offer such low return
http://www.investingforbeginners.eu/investing_in_land_agricultural_reits-p0-i12
US Debt Relief
Let me give you few facts at first that we would now what are we talking about: The General government gross debt in percent of GDP in the United States was reported at 83.21 percent of GDP in 2009 (90% of GDP
http://www.investingforbeginners.eu/us_debt_relief-p0-i13
Where Are the Investment Markets Moving Now?
Some of the market participants call the current situation a “crisis” others are starting to be convinced that we are in a bear market. While others just don’t know how to call it. Well, I call
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Stocks Riskier than Bonds?
It is so common that stocks are riskier investments than bonds; nobody is even considering this question. Would I doubt it? Of course not, stocks are stocks and bonds are bonds. But I would like to look at it fro
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Foundation of the Europes Financial Market
The key question in Europe now is how European Union will look after few years from now. This question is the most important at these days for all the Europe and may have affect to the entire world.
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Bond Investment: Government Bonds and Corporate Bonds
Corporate Bonds and Government Bonds Today I want to discuss another untraditional topic. However, this topic concerns the most traditional investments – bonds. Bonds been used for very long time a
http://www.investingforbeginners.eu/bond_investment_government_bonds_and_corporate_bonds-p0-i17
How ECB Is Affecting Investment Markets?
Today was announced very interesting news. The news is about the fact that ECB (European Central Banks) lends 489 billion of Euros to the banks. It is a really huge amount of capital that flows from ECB to the fi
http://www.investingforbeginners.eu/how_ecb_is_affecting_investment_markets-p0-i18
Problems in Greece: Is It Going to End?
Greece sounds like a curse for all investors and all other participants of the financial market. Yes, it is a small country compared to the global or European economy by the size of a GDP or other economical indi
http://www.investingforbeginners.eu/problems_in_greece_is_it_going_to_end-p0-i19
How to Beat the Stock Market
Investing is good, but the real challenge for every portfolio manager is to beat the stock market, or beat the market. Of course the term ‘market’ is not very exact. In reality to beat the market is t
http://www.investingforbeginners.eu/how_to_beat_the_stock_market-p0-i20
Baltic Investment
Baltic Stock Exchange Baltic stock exchange now belongs to the world gigantic stock exchange NASDAQ OMX, and now is called NASDAQ OMX Baltic. Historically Lithuania, Latvia and Estonia had their own nati
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Is the Bubble of Commodities Going Down?
It can be said that commodity bubble already went down. The prices of the most commodities have slumped significantly during several last months. But was there really a bubble? Yes, the prices have
http://www.investingforbeginners.eu/is_the_bubble_of_commodities_going_down-p0-i24
Putting Investment Indicators from Economy to Good Use
Putting investment indicators from economy to good use People in various professions – journalists, stock market traders, businessmen, or individuals looking at investing in property – usually refer to inv
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Investment psychology gains momentum in contemporary business world
Many individuals make rational investment decisions, but others are swayed by their emotions, serving as clear-cut illustration of just how the mindset and behavior can affect finances, and this is an important a
http://www.investingforbeginners.eu/investment_psychology_gains_momentum_in_contemporary_business_world-p0-i27
The best investment is education? Go figure
Many people find the idea of investing on their own business and making oodles of money out of it quite cool, little realizing it takes lots of hard work and patience to succeed, and then there’s the perenn
http://www.investingforbeginners.eu/the_best_investment_is_education_go_figure-p0-i30
Tips to let small business investments take off
Studies show that small business investments peter out or fall by the wayside within the first two to three years after the owners have started investing and operating. Lack of planning, management skill, or tech
http://www.investingforbeginners.eu/tips_to_let_small_business_investments_take_off-p0-i33
Investments
(Are you looking for investment definition?) Investments are instruments that allow us to receive a higher amount of money than was spent. If someone spends 10 euros or dollars and he knows that he will receive
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Investing
Investing - what is that exactly? Probably you have heard many different definitions of investing. However, what is the essence of it? The essence is very simple: investing - a present sacrifice for the future.If
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Sortino Ratio
Sortino ratio is a financial ratio that is used to measure the performance of investment portfolio and is very similar to a Sharpe ratio. The main difference between Sortino ratio and Sharpe ratio is that Sharpe
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Investing Top 10
INVESTING 10 things that you should try to do: Always have an investment strategy and follow it strictly. Set up an investment strategy (investing rules) even before beginning of investing: t
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Investment in Stocks
Stocks (shares) are investments that attract the most attention in financial markets, and perhaps stocks are worth it, because investors can expect the highest return from stocks among the range of traditional investme
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Investing for Beginners
Investing can seem a hard thing to do for beginners. But investing for beginners isn‘t any harder than other things in the beginning. Many processes can look difficult until you don‘t know what is hid
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Investing for Retirement
Investing for retirement may be one of the most reasonable investment objectives. Sometimes, people invest so they can afford expensive things that they otherwise could not afford without investing. For example
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Investment in Cash
Bank (saving) Accounts, Deposits, Deposit Certificates, Treasure Bills, Money Market Funds When we are talking about investment, cash is not only the real paper (or metal) money that are held in the wallet or under the
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Asset Management
Definition Asset management which also is called as investment management has many similarities to finance management but investment management is more specific and narrow area of finance. Invest
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Non-Financial Investments
When talks go about investing and investments everybody focuses on financial investments forgetting that spectrum of investments is much broader. Investment in non-financial investments is also popular, especiall
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Investment in Property
Investment in housing and commercial real estate I don‘t know why, but historically in most places almost every countryman becomes to a property investment expert, or at least he thinks he is. And perhaps that's q
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Direct Investment
Investment in Tangible Assets Direct investment are very wide issue to study, but it‘s not so close to traditional investing. Direct investments are more related with business development and would depend
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Investment in Index-Linked Bonds
Index-linked bonds are also known as structured bonds. This product is more popular in immature investment markets, where investors are not sufficiently educated. Diversity of index-linked bonds can be very high,
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Strategy Investment
Strategy investment refers to an investment strategy, which should be wise chosen according to investing person character and market environment. Investing always has to be strategic and foresee possible future e
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Investing Benefits For Beginners
Is the investment really worth it? Many investing beginners ask a question: why to invest? There can be different answers. Some might even say that is not worth to invest. Why let your money into uncertainty if yo
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Net Debt
Definition 'Net debt' is used quite often in finance and it is equal to financial liabilities of the company that are reduced by the cash amount (and cash equivalents) that are held by the company.
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Finance Management
Financial management, asset management, investment management, wealth management in fact are similar processes only called in different names. An investments definition may include both financial assets and real
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Investment Manager
Investment management or finance management are particularly a lot of attention and responsibility requiring areas. It does not matter whether you manage your money whether corporate funds, in any case, it is important t
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Investment Strategy by Age
It is very popular to allocate asset classes in investment portfolio according to investor’s age. And it has some reasonable justification: when investor’s age is changing – his risk tolerance a
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Investment Adviser
Investment advisor/adviser does the same jog as investment consultant does. But investment advisor is a term used by the Securities and Exchange Commission (SEC). So usually investment advisor refers to a company
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Speculation
Speculation is an investment action made under intentions to earn large profits in short term. Usually such actions are very risky and lays somewhere between investing and gambling. It is hard to say where exactl
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Financial Market
A financial market is a term widely used to describe virtual place/mechanism that allows meeting the sellers and buyers of the investment and other financial products. In current times buyers and sellers do not m
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Spot Market
Spot markets are a contrast to the futures markets because in spot market transaction are completed immediately and in cash (or bank transfer). The spot market represents the real current prices on the market of
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Stock Split
A stock split is a divide of existing company’s shares decreasing its face value. For every owned share an investor gets a several (or one) additional shares depending on split ratio, and the total out
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Book Value of Share
A book value of share is calculated dividing all company’s book value (less preferred equity) by its common share number. For example, if company’s book value is 1,000,000 USD and issued share nu
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Stock Market Crash
A stock market crash is a investing term used to describe fast and sharp decrease of all or almost all stock prices on the exchange. However, there is no exact definition how long and how strong market fall shoul
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Ex-Dividend Date
Ex-dividend date is a first day when investor does no longer receive dividends paid by company’s shares. This is important factor because the period of shares' settlement after transacti
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Initial Public Offering (IPO)
An initial public offering (IPO) is a first introduce of company’s shares to the stock market. However, during initial public offering shares are sold not on the stock exchange but on network of clients by
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Flipping
Flipping is partly an investment strategy, partly a speculation when investor resells acquired property quickly on purpose to get fast profit. Flipping is most common in IPO’s when retail inv
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Investment Portfolio
An investment portfolio is a composition of different investments made on purpose to achieve the highest return at predetermined risk level. Investment portfolio can include all kinds of investments: stocks,
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Market Timing
Market timing is investor's actions when investments are switched between asset classes and may be a part of investment strategy. For example, if investor sees that stocks are very high and economical downturn is
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Investment Group
An investment group is an organization, which activity is closely related with investment. Still there can be no exact definition what investment group does because they might have different juridical forms
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Capital Investment Group
Capital investment group is an organization that can have many juridical forms. Usually capital investment group is privately held or public organization, that invests in stakes of non-listed companies, real esta
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real Estate Investment Group
real estate investment group is mostly similar to the capital investment group. The main difference is that real estate investment group concentrates its investments on real estate property, when capital investme
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Financial Investment Group
Financial investment group usually is different from capital investment group. Regularly financial investment group includes a brokerage firm and provides standard functions: financial consultations, investment m
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real Estate Investment Trust (REIT)
real estate investment trust (REIT) is a corporate entity that invests exceptionally in to real estate sector. Usually securities of REIT’s are traded on stock exchange and every investor can easily acquire
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Business Valuation
The goal of business valuation is to determine the correct market value of a business. Usually business valuation is performed by professional valuators / assessors who have required qualifications for the job.&n
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Insurance Company
An insurance company may provide insurance services of two different directions: life insurance and non-life insurance. Non-life insurance is not very closely related (if to mention own insurance company’s
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Life Insurance
A life insurance is a service provided by insurance companies trying to bring more financial stability in to the lives of people. Looking from investment point life insurance is two products c
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Physical Asset Market
A physical asset market is a market in which real products are traded. Physical asset market can also be called real asset market. Such real/tangible products traded in physical asset markets are gold, grain, mea
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Mortgage Markets
Mortgage markets are markets, in which credits, that include pledged real estate property, are created and traded. Usually in mortgage markets main players are financial institutions: retail banks sell such mortg
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Risk-Free Interest Rate
A risk-free interest rate is rate of interests that would be paid by fixed income securities that contains no risk at all. For a very long time short-term US Treasury securities was used to d
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real Risk-Free Interest Rate
A real risk-free interest rate is very similar to (nominal) risk free rate. The only difference is that real risk free rate is under condition if no inflation expected. real risk free rate is deducted from nomina
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Junk Bonds
Junk bonds are bonds that have a speculative-grade credit rating, which is BB or lower. Junk bonds are riskier but they have higher yields. The spread between junk bond yield and safe bond yield (c
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Investment Advisor
An investment advisor is a person or a company that is registered with the Securities and Exchange Commission (SEC) and provides investment consultancies for remuneration. Investment advisor might provide consult
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Investment Consultant
An investment consultant is a job position in financial companies. Main functions of investment consultant: Help private investors to make a proper investment strategy according to investors risk tolerance. A
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Cheap Stocks
Cheap stocks are such stocks that are traded at low valuation multiples. For example, if you see a telecom or utility company of which P/E is equal to 6 and EV/EBITDA is equal to 3, you may say it is a cheap stoc
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Dividend Growth Stocks
Dividend growth stocks are stocks that are hard to find in reality. Because the stock must be either value stock (large dividend payments) either growth stock (small dividend payments) or either something in betw
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Investment Strategies
Investment (investing) strategy – often discussed by both amateur and professional investors, but in fact very rarely encountered. Amateurs usually imagine that they has an investment strategy only after th
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Investment Management Fees
Investment management fees (fees that are paid straight to investment manager) basically are one of these types: Performance based fee. Performance based fee is calculated according to increase of inve
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Total Expense Ratio
‘Total expense ratio shows all expenses of investment fund. It is a good measure that shows you how much of different fees you are really paying when investing in some fund. Total expense ratio is a percent
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Investment Performance Measurement
Many investors are happy about investment managers until the stock market is growing, but when the decline starts investment managers gets only the worst words about their job. However, this is wrong attitud
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Quantitative Investment Management
Quantitative investment management says, “Don’t worry about investment management, and let to do the job for the computer”. It is a completely different approach compared to ‘value d
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Sharpe Ratio
Sharpe ratio measures the above risk free performance of investment portfolio in relation to its risk. This ratio was developed by William F. Sharpe which introduced the ratio in 1966. Now Sharpe ratio is the mos
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Working Capital
Working capital can be calculated from balance sheet data. There are few ways to calculate working capital, but the most accurate is this one (for operating working capital): Working capital = total curr
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Inflation
Inflation is a percent that reflects a price increase of goods and services portfolio. When inflation occurs, money is losing its purchasing power. For example, if inflation would keep at 8% for 9 years (it would
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Deflation
Deflation is a process opposite to inflation and occurs when inflation is negative. Deflation means that prices of goods and services are decreasing. Such situation when prices are decreasing is not very common i
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Stagflation
Stagflation is an economical situation, when high inflation and stagnation of the economy come together. It is very difficult situation, because it not allows using monetary politics efficiently to revitalize the
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P/E Ratio
P/E ratio is the most popular valuation multiple that is used for stock analysis. This ratio shows the price of the stock compared to its earnings. The multiple is so popular because of its simplicity and im
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P/B Ratio
P/B (P/Bv or price-to-book) ratio shows how expensive stock is compared to its books value. Company’s book value (also called equity, capital, shareholders funds etc.) is equal to company’s total assets les
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P/NAV Ratio
Price to Net Asset Value P/NAV ratio shows how expensive share is compared to its NAV (net asset value). This ratio is very similar to P/B ratio but in this case market values (not book values) are used. M
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Cost of Equity
Cost of equity is the rate of return that is required by equity owners from their investment. Of course, requirements of the shareholders have to be real and meet market conditions as well. Basically cost of equi
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Stock Valuation
Stock valuation is very important part of investing in stocks, and this part is the most time consuming and knowledge requiring. Stock valuation is a necessary and main step at stock picking process. The only way
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Relative Valuation
Comparative analysis Relative valuation is stock valuation method that gained its popularity because of simplicity and practical importance. The key principle of relative valuation is about valuation multi
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Replacement Cost Valuation
Replacement cost valuation method is not very popular at stock valuation. Most of the investors are picking stocks with help of relative valuation or DCF valuation. Only when those two methods aren’t possib
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Correlation
Correlation is a statistical measure that shows the relationship between two objects. Correlation may range between +1 and -1. If correlation between the objects is 0 that means they are not dependable on each ot
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WACC
WACC (Weighted Average Capital Cost) shows cost of capital when capital is consisted of both equity and debt capital. So WACC simply calculates the weighted average between equity cost and debt cost.
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Hedge Funds
Hedge funds are investment funds that use financial leverage and derivatives to achieve better investment results. The name of hedge fund came from hedging, which originally is a defensive investment strategy, bu
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Free Float
Free float is a proportion of company’s shares that are really traded in the market. Normally, free float is lower than the total outstanding number of shares, because most of the largest shareholders do no
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Eurobonds
Eurobonds are bonds that are issued in other that home currency. It does not mean that Eurobonds have to be denominated in Euros. Actually, most of the Eurobonds that are issued in Europe are in denominated in US
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Inventory Turnover Ratio
Inventory turnover ratio shows how quickly company’s inventory is changing compared to its sales or cost of goods sold. This ratio shows how effectively inventory is managed in company’s production/di
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ROE
ROE (Return on Equity) shows profitability of company’s book value. Company’s book value (equity) is equal to company’s assets less liabilities, and ROE is usually higher if company ha
http://www.investingforbeginners.eu/roe
ROA
ROA (Return on Assets) shows what profits are earned by company’s assets. Of course, assets alone usually do not earn the profit, because most of the times profit is the result of know-how and hard work of
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Margin Call
Buying on Margin Costs of Buying Stocks on Margin Margin Call The Pros and Cons Psychology: Is it worth? Margin call is a fabulous term which carries some mysticism. However, there is nothing
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The Pros and Cons of Buying on Margin
Buying on Margin Costs of Buying Stocks on Margin Margin Call The Pros and Cons of Buying on Margin Psychology of Buying on Margin: Is it worth? The opportunity provided by buying on margin i
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Margin Calls
Margin call is a call by margin trading service provider to an investor who is buying on margin. Such calls are provided when assets (collateral) in the investment portfolio are losing value and reach the margin. Margin
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Financial Investment
Financial investment is any financial asset that should provide a return for investor. Financial asset is an asset that doesn’t have tangible form and has some financial obligations to its owner. All securi
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Trading Stocks
Trading stocks is a process when stocks are bought and sold on the stock market. How differs trading stocks and investing in stocks? Well, it is the same, just is common to think that investing is a long term pro
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Trading Platform
Trading platform is an electronic tool provided by brokerage company or other financial intermediary that allows for investor to buy and sell stocks or other securities using his computer. In other words trading
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M&A
M&A (mergers & acquisitions) is a field of corporate finance in which corporations are acquiring other companies or are merging in between. Theoretically it doesn’t sound very impressive, but in rea
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Merger
A merger is a deal when two (theoretically possible more) companies are merging in between to achieve synergy. Mergers are part of M&A market and differ from acquisition by payment method for the stake. In me
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Hostile Takeover
A hostile takeover is an acquisition of a target company when its management doesn’t want the company to be overtaken by another corporation. The target of a hostile takeover may be only listed company whic
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Synergy
Synergy is a popular term among management of the companies as well as among M&A participants. In finance synergy means a savings in some costs when several units are merged. The theory says it should be like
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Leveraged Buyout
A leveraged buyout (LBO) is a takeover of a company when debt capital is the main financing source for the acquisition and the acquired assets are used as collateral to receive the needed debt. The LBO may be exe
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Employee Buyout
An employee buyout is a takeover of the company’s control interest by its employees (usually employee stock ownership plan). Compared to a management buyout, employee buyout involves much more employees, an
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Market Value
The meaning of market value depends on the context for which the term is applied. Generally, market value is a price at which the buyer would agree to buy and seller would agree to sell the object without any ext
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Bullish
Bullish is an investor's attitude when he believes that the investment market is going to rise in the near future. Most of the times this term is applied for investments in stocks, when is believed that stock mar
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Par Value
Par value also is called face value or nominal value, and is a nominal amount of money that shows how much of money is related to the security nominally. Par value is used most commonly for two types of securitie
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Investment Products
Investment products basically are investments that are packed and adopted for every investor. The best example of investment product could be mutual funds or any other investment funds that are well diversified a
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Pig (investor)
A pig is an animal known by every farmer. However, at investing pigs are also popular yet the meaning is different. In investment world are two kinds of animals mentioned the most: bulls and bears. Bulli
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Risk Tolerance
Risk tolerance is a characteristic that describes the investor and his ability to withstand losses from investments. The higher risk tolerance of investor the more losses he/she may handle. Investm
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Risk Averse
Risk averse is a characteristic of an investor who is avoiding risk. The more investor is avoiding the risk the more is he risk averse. Almost all the investors (as people are too) are more or less risk averse an
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Fund Manager
A fund manager is an employee of investment management company which is responsible for the management of the fund’s assets. Most of the times, more than one person is involved in fund’s management bu
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Portfolio Manager
A portfolio manager is an investment professional that takes over the management of an investment portfolio. There are many types of managed investment portfolios: mutual funds, pension funds, insurance funds, po
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High Return Investments
High-return investments (or high-yield investments) are investments that can provide the higher return than average investments, and of course such investments are riskier. The reality is that people have differe
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Day Trader
A day trader is a speculator that trades in stocks, currencies or some other securities within a very short period. Most of the trades are made by the trading in one day period. Day trader is a pure speculator, e
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Stock Trader
A stock trader is a speculator that is trying to make profits from quick changes in value of stocks or other securities that he trades. Stock trader have few differences from normal investor and the main differen
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Investment Bubble
Investment bubble is a jump in price of particular investment when price starts increasing faster and faster as long as the price reaches its peak and falls down to a similar to previous level, if there are no ot
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Passive Investment
Passive investment (management) is an investment style when investors skips the steps of securities picking and market timing and invests mainly in index funds that have the lowest expenses. P
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Best Investments
Best investments are always wanted, but the reality is that there are no best investments for everyone. And if such investment would exist then those investments would become an investment bubble and would not st
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Money Investing
Money investing is a hard task for beginners at investing. However, it is not a rocket science and can be learned by anyone who is really attracted to finances and have enough of time for it. Money is equal to ca
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Valuation Methods
There are three main valuation methods used for business valuation or stock valuation: Relative valuation is very easy to use and is the fastest method. That is why this method is so popular among fina
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Valuation Consultants
Valuation consultants are professionals that know everything about the value of an asset or business. The real market value consists of many parts and all of them may have critical importance to the value. Only e
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Asset Valuation
The specifics of asset valuation depend on particular asset class. However, the main valuation methods are the same for all assets. The mostly used methods are relative valuation and DCF valuation. Relative valua
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Business Valuation Methods
Business valuation methods are not much different from general valuation methods. Maybe business valuation is more difficult and complicated than real estate valuation but the methods are the same only the differ
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Stock Market Trading
Stock market trading is similar to stock market investing; however, it is not exactly the same. At first, stock trading refers to a stock trader who trades stocks very often and do not invests for a long term. Lo
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Best Stocks
Best stocks would depend on criteria of the particular investor. Of course, you could say that best stocks should be the stocks that will increase the most in the future. But reality is that nobody knows about th
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Liquidity
(1) Market liquidity is a characteristic of a security or other traded investment that shows how easy it is convertible in to cash at a market value. Usually when investor decides to sell some investment and
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Investor Education
Investor education is very important task to make investors achieve better results. It is hard to become the best specialist of investment management in short time but every investor can learn to avoid the main m
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Investment Management Salaries
The media always pay a lot of attention to investment management salaries and maybe those salaries are worth it. Investment management business as investment management consulting or investment fund management re
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real Estate Investment Management
real estate investment management is a management of real estate portfolio. real estate investments are different from standard investments (securities) and management of real estate investments differs from inve
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real Estate Investors
real estate investors are individuals or investment companies that are investing in real estate (property). There few main types of real estate investors: • real estate developers are investors that
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Investment Management Business
Investment management business is a large part of a financial industry and is very important for investment banks and other investment companies because investment management business has quite good profitability
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Smart Investors
Smart investors can be called investors that do smart decisions at investing process. Of course it is hard to tell what is really smart and what is not. The true is that investing is not about being smart because
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Equity Investors
Equity investors are investors that are investing in equity investments: listed stocks or similar ownership securities, stock funds, unlisted stock stakes or other half-equity strategies (equity loan, mezzanine f
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Undervalued Stocks
Undervalued stocks are called those stocks that are believed to have higher target price than their stock price on the exchange. The higher is the difference the more stock is undervalued. If stock price in the m
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Small Business Investors
Small business investors are private investors or business investors that are investing in to small businesses. Small businesses are also in need for capital and the best source for that capital might a bank beca
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Angel Investors
Angel investors are investors that have capital for investments and are investing in young companies that are in start-up stage and are needed for capital to exploit growth potential. The source of funding from a
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Overvalued Stocks
Overvalued stocks are those stocks that cost in stock market more than their target price is. Target price of the stock is calculated market value of a stock using stock valuation methods. The most popular method
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Cash Flow Statement
Cash flow statement is one of the three main financial statements (others are income statement and balance sheet). If income statement exposes income that was received according accounting standards, cash flow st
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Net Income
Net income (net profit) is a financial indicator of the company that shows the real profitability of the business in accordance to its capital structure. Net income is equal to all revenue and gains less all expe
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Operating Margin
Operating margin is a profitability percentage that shows what company’s profit margin is before it pays interests and taxes. Operating margin simply ignores capital structure (because ignores financial act
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Financial Analysis
Financial analysis is an important part of investing, especially if investor wants better results from his investments. Of course it is possible to ignore financial analysis and make investment decisions based on
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Return
Return analysis is different from profitability analysis because usually return is measured as a profitability of the assets, investments, capital or other similar asset group but not as a profitability of the re
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Debt Coverage Ratio
Debt coverage ratio (debt service coverage ratio) is a ratio that measures solvency risk and mostly is applied for property projects. There are many debt coverage ratios that are used in financial practice on thi
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Times Interest Earned Ratio
‘Times interest earned ratio' compares ‘earnings before interest and taxes’ of the company to its interest expenses. Low ratio means that company may be in dangerous situation and its interest e
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Debt to Asset Ratio
Debt to asset ratio (also called as D/A ratio, Debt/Asset) measures how big is company’s debt compared to its assets. Debt to asset ratio is very similar to debt to equity (D/E) ratio but normally is lower
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Financial Planning
Financial planning is a type of financial analysis of which goal is to predict financial situation of the object in the future. There are two main trends where financial planning can be applied: in corporate fina
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Turnover Ratio
(1) Turnover ratio of mutual fund shows how quickly assets of the fund are changing. Actively managed investment funds have higher turnover ratio than passively managed funds, and normally turnover ratio is measu
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Cash Debt Coverage Ratio
‘Cash debt coverage ratio’ (also known as ‘current cash debt coverage ratio’) measures company’s ability to repay its debts. Basically, it compares cash flow that is received from op
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Financial Planning Process
Financial planning process requires the most professionalism and attention to the every detail. While financial planning estimates main financial indicators or financial statements, the process of it includes als
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Strategic Financial Planning
Strategic financial planning is a bit different from standard financial planning because standard financial planning focuses on a budget which is detailed estimation of financial statements when strategic financi
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Working Capital Management
Why Working Capital Is Important? Working capital is one of the main parts of company’s finances and every manager, even of the small company, manages working capital despite the fact he knows about that o
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Working Capital Calculation
There are few modifications of working capital calculation. All data that are needed for working capital calculation can be found in balance sheet (which is one the three main financial statements).
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Investments in Blue Chip Stocks
Stock investments require high degree of financial knowledge and the understanding of market realities, but only if you are seeking for the most efficient result. Yet, the reality is that there are millions of pe
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Investments in Small Cap Stocks
Investments in Small Cap Stocks Investments in small cap stocks could be compared to penny stock investments but the term ‘penny stocks’ is not specific enough. The thing is that the determination of
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Stocks and Commodities
You may ask how stocks and commodities related are. And the answer is simple: everything is related and especially in financial markets. Normally, if some of the main asset class (as stocks) looses or gains
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Earnings Estimate
Earnings estimate is a forecast for income of the closest future period. Earnings estimate usually is calculated by the employees of analyzed company or analysts of other financial companies. Normally, earnings e
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Pro Forma
Pro forma is a type of financial statement that reflects financial information under some conditional basis. For example, if company has discontinued some activity, it may provide normal income statement and pro
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Price to Cash Flow Ratio
Price to cash flow ratio (P/CF) and EV/CF ratio are similar but there are some differences. The main difference is that EV/CF also includes the effect of company’s financial debt which says a different
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Free Cash Flow Yield
Free cash flow yield (FCF yield) show how much of cash that may be distributed to shareholders the business earns compared to its price on the stock exchange (including both: equity value and debt value or just e
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Free Cash Flow
Free cash flow of the company shows how much of cash business has earned in the reality over the period. There are many ways to determine the free cash flow of the company, and most often this indicator is provid
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Capex
Capex (capital expenditure) is company’s investment in long-term assets that are needed to continue the business or for future’s growth. The perfect examples of capital expenditure can be an acquisiti
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EBITA
EBITA (earnings before interest, taxes and amortization) is a financial indicator that shows company’s earnings which are equal to pretax profit plus corporate tax and amortization. EBITA is
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Cash Investments
Cash investments are the safest investments over short-term period. Such investments include saving accounts, certificates of deposit, money market instruments (treasury bills, money market funds). The main crite
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Sector
Sector is a segment of an economy that distinguishes oneself by some characteristics that belongs to that segment. There are a lot of different classifications used in practice to classify different business segm
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Economic Cycle
What is economical cycle? An economic cycle means the repeated changes of the economical trends. While during very long economical period economy always has up-trend because of technological evolution and increa
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Beta
What is beta? Beta is a ratio that measures volatility of an investment in relation to the whole market. In other words, it shows how the price of stock was changing compared to the whole market. Theoretically,
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real Estate Flipping
real estate flipping always gets popular when economical cycle is increasing. It usually coincides with the period of real estate prices boom. It looks very simple when real estate prices are raising and some peo
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Intangible Assets
All assets can be classified to three main groups: tangible assets, financial assets and intangible assets. Intangible assets are those assets that aren’t financial and don’t have a real physical form
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Tangible Assets
Basically all assets can be divided in tangible assets or non-tangible assets (intangible and financial). Tangible assets are those assets that exist physically and the value of them depends on their physical con
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Rate of Return
A rate of return is a percentage that shows what is the profit or loss gained on some investment on annual basis. There are many ways to calculate the rate of return including internal rate of return, arithmetica
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Return on Invested Capital
Return on invested capital (ROIC) or also called return on capital is a financial ratio employed to measure nominal company’s return that is earned by capital invested in operating asset. Basically return o
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CFROI
CFROI or cash flow return on investment is a rate of return that measures the performance of corporation based on its cash flow generation ability. CFROI is not very popular but is still used by some companies an
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Fixed Asset Turnover
Fixed asset turnover ratio is a financial ratio that measures how much of sales are created by company’s property, plant and equipment. The ‘higher asset turnover’ is the better, because it mean
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Technical Analysis of Stocks
Technical analysis of stocks is widely known type of stock analysis. Technical analysis is completely opposite to fundamental analysis. While fundamental analysis relies on company’s ability to generate cas
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Quick Ratio
Quick ratio (also called ‘acid test ratio’) is a financial ratio that measures company’s financial liquidity. This ratio compares company’s most liquid assets and short-term liabilities. I
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Current Ratio
Current ratio is a financial ratio that measures company’s financial liquidity in short term. In simple words, this ratio compares company’s short-term assets to its short term liabilities. If short-t
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Return on Capital Employed
Return on capital employed ratio (ROCE) measures company’s return compared to its employed capital. Return in this case is some kind of profit (mostly EBIT or NOPAT) and the capital employed means equity ca
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Cost/Income Ratio
Cost/income ratio is very popular financial ratio in bank analysis. This ratio measures the relation of bank’s operating costs to operating income. Basically, lower ratio is better because means higher prof
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Days Inventory Outstanding
‘Days inventory outstanding’ measures how efficiently company manages its inventory. Inventory often is the main part of working capital and it is very important to managed inventory efficiently. Ther
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Liquidity Ratio
Liquidity ratio is a ratio that measures company’s liquidity. At first, it is needed to mention that liquidity may have two meanings: financial liquidity of a company or market liquidity of some asset. Liqu
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Total Debt
Definition The understanding of the total debt may be different depending on the experience of the user. Traditionally, ‘total debt’ includes financial liabilities of the company, although ot
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Non-Operating Assets
Non-operating assets are assets of the company that aren’t used in the main activity of the company. Such assets can be either financial or non-financial. This asset type is very important during the valuat
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Book Value
There are two main types of values that are used in finance: Book value Market value Book value is a value that is recorded in the balance sheet of a company. Every asset of the company must
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CAGR Formula
CAGR formula is used to calculate 'compound annual growth rate': CAGR = (Value at the end / Value at the beginning) ^ (1 / Years) - 1 * Can be multiplied by 100%. Where: Value at t
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Leverage
Leverage definition In finance leverage means usage of debt capital in addition to the equity capital in order to increase the profit. Increase in leverage is understood as increase in riskiness and volatility.
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The website INVESTING FOR BEGINNERS EU was created in order to educate investors and other participants of the financial markets in accordance to the highest standards. Investment process is not re
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