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The Most Known Investors: Who are they?
Regularly, a magazine is releasing its top 100 billionaires of the world. These are the investment giants and the masters of investing. We all know that the investing world is a world of strategies and the
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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
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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 Mutual Funds
Investment Funds (Collective Investment) Investment in mutual funds is one of the most popular types of investment. A mutual fund is just a large and well diversified investment portfolio of many securities, in which ca
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Terminal Value
Terminal value is a value of the business (or other asset) used in discounted cash flow (DCF) method that is added after the discontinuing of the cash flow forecasting. DCF valuation is based on the sum
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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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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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Dividend Payout Ratio
Payout ratio is a percentage that shows a portion of company’s income distributed as dividends. Formula Dividend payout ratio = common shares dividends / net income *For the sam
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Pension Funds
Pension funds are investment funds established on purpose to generate income for retirement. They are very useful in economy when society gets older and number of population decreases, because a working class is
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Private Banking
Private banking is a service provided for the richest clients of the commercial bank. Such clients have designated personal banker from the institution and they can call to that personal banker for any financial
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Corporation
A corporation is a legal business form that is dominating over capital world. Most of the biggest businesses in the world are working under corporation form. Capital raising, transferring of shares, mergers &
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Corporate Finance
Corporate finance is a niche of finance that deals with financial questions related to corporations. The main goal of every company should be stockholders wealth maximization, but to achieve that m
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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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working Investment
working investment mostly refers to working capital, which is equal to current assets less current liabilities. The other meaning of working investments might be that those are investments that are
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EV/S Ratio
Enterprise Value to Sales Ratio EV/S ratio shows how expensive firm is compared to its sales. This multiple is important when company is unprofitable or profits margins are very low and turnaround is expected in
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EV/EBITDA Ratio
EBITDA Multiple EV/EBITDA ratio shows how expensive firm is compared to its EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization). EV to EBITDA multiple is mostly used by professionals because
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DCF Valuation
Discounted Cash Flow Analysis DCF valuation might be applied to any asset that generates positive free cash flow or is expected to generate that cash flow in the future. DCF valuation might be directly applied t
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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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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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Days Sales Outstanding
Days sales outstanding (DSO) shows how quickly company collect its money from sales. Usually company doesn’t get paid immediately; depending on business and distributors network such period may be from seve
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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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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 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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Broker
A broker is an intermediary that helps for retail or other investors buy their investments. Broker can be as a person (job title) or a brokerage company that acts as a financial intermediary between the seller an
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Balance Sheet
Balance sheet is one of the three main financial statements (others are income statement and cash flow statement). Balance sheet also might be called a statement of financial position because this statement expla
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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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Debt to Equity
Debt to equity ratio (also known as D/E ratio, Debt/Equity) measures how big is company’s debt compared to its book capital (equity). The higher is the debt to equity ratio the higher is the insolvency risk
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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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Financial Forecasting
Financial forecasting is a part of financial planning and also a part of a DCF valuation. But usually financial planning covers only a period of year or two while financial forecasting regularly covers about five
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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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working Capital Ratio
working capital ratio may have several meanings in practice: (1) working capital ratio = working capital / Sales (2) working capital ratio = Current ratio = Current assets / Current liabilities (3)
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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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Price to Free Cash Flow
Price to free cash flow (P/FCF) or EV/FCF ratio are ratios that compare company's price to its free cash flow. The main difference between those two ratios is that EV/FCF also includes the eff
http://www.investingforbeginners.eu/price_to_free_cash_flow
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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Operating Cash Flow
Operating cash flow or ‘cash flow from operations’ (CFFO) is one of the most important among financial indicators and is used to measure company’s results in cash terms. While net income or oper
http://www.investingforbeginners.eu/operating_cash_flow
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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Financial Ratios
Financial ratios are ratios that are used in financial analysis or in other words that are using financial data of a company. Such financial data usually is found in financial statements (income statement, balanc
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Accounts Payable Turnover
Accounts payable turnover ratio shows how quickly company is paying to its suppliers for services or goods and materials. If payables turnover is very low, it may signify different reasons behind it: Company i
http://www.investingforbeginners.eu/accounts_payable_turnover
Fundamental Analysis
Fundamental analysis is the type of financial analysis that relies on company’s fundamentals. Those fundamentals depend on the target of the analysis. For example, fundamental analysis of stock depends on i
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Receivables Turnover
Receivables turnover ratio (also called as accounts receivable turnover) is a financial ratio that measures how efficiently company collects its receivables. If receivables turnover is very low, it means company
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Average Collection Period
Average collection period is a financial ratio that is used to measure how fast company collects its receivables. ‘Average collection period’ shows what is the average time period till company gets ca
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Capital Employed
Capital employed is a value of capital investments in a company. Basically, the capital of each company can be classified in these types of capital: Equity capital Debt capital working capital
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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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Cash Conversion Cycle
Cash conversion cycle is a measure that shows how many days take to convert the cash of a company in to production and to sell it. However, the formula of conversion cycle also includes ‘days payable outsta
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Days Payable Outstanding
‘Days payable outstanding’ ratio shows how long it takes the company to pay its liabilities to the suppliers. The longer period means that company is not in a hurry to settle up its debts to the suppl
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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
http://www.investingforbeginners.eu/days_inventory_outstanding
Cash Turnover Ratio
Cash turnover ratio compares company’s sales to its cash and measures how effectively company is using cash assets. However, this financial ratio now is a bit outworn and is not very meaningful for most of
http://www.investingforbeginners.eu/cash_turnover_ratio
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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Gross Debt
(1) Gross debt in corporate finance is often used as synonym for ‘total debt’, however there might be some differences depending on the version of the total debt. Technically, ‘gross debt’
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