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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
http://www.investingforbeginners.eu/terminal_value
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.
http://www.investingforbeginners.eu/net_debt
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
http://www.investingforbeginners.eu/book_value_of_share
Stock book value
Stock book value is a book value of one share. It is calculated dividing shareholders equity by share number and gives some very approximate investing guidance about the value of the stock. It is popular to look
http://www.investingforbeginners.eu/stock_book_value
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
http://www.investingforbeginners.eu/p_b_ratio
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
http://www.investingforbeginners.eu/p_nav_ratio
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.
http://www.investingforbeginners.eu/wacc
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
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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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
http://www.investingforbeginners.eu/balance_sheet
Minority Interest
Minority interest (non-controlling interest) is a part of net income or of an equity that does not belong to the shareholders of the main group. Basically there are two types of the minority interest:
http://www.investingforbeginners.eu/minority_interest
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
http://www.investingforbeginners.eu/capex
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
http://www.investingforbeginners.eu/intangible_assets
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
http://www.investingforbeginners.eu/return_on_invested_capital
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
http://www.investingforbeginners.eu/financial_ratios
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
http://www.investingforbeginners.eu/quick_ratio
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
http://www.investingforbeginners.eu/current_ratio
Equity Ratio
Equity ratio is a financial ratio that compares company’s equity to assets. Basically, it shows what part equity capital makes in total capital of a company. If ‘equity ratio’ is very high (clos
http://www.investingforbeginners.eu/equity_ratio
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
http://www.investingforbeginners.eu/return_on_capital_employed
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
http://www.investingforbeginners.eu/liquidity_ratio
Asset to Equity Ratio
Asset to equity ratio compares company’s assets to the book value and measures the riskiness of the company. This ratio cannot be lower than 1.0, and if it is equal to 1, it means that assets are equal to e
http://www.investingforbeginners.eu/asset_to_equity_ratio
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
http://www.investingforbeginners.eu/book_value
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.
http://www.investingforbeginners.eu/leverage
