Adjusted Present Value (APV) is a technique combining the all-equity net present value of an investment with additional value adjustments relating to specific financing elements like tax concessions.
The rate of return on an equity interest, taking into account financing costs and income tax implications of the investor.
A mathematical figure showing the present value of an income stream that generates one dollar of income each period for a specified number of periods.
An accounting term referring to a calculated measure used to compare bonds of varying durations and repayment schedules by averaging the periods for which funds are available, weighted by the amounts available in each period.
The Band of Investment is a finance and investment principle that refers to the weighted average of debt and equity rates used to estimate the cost of capital for a business or project.
The evaluation of a proposed activity by determining the value of the anticipated benefits compared to the costs incurred, ensuring a financially attractive decision when benefits exceed costs. It’s essential to also consider non-financial factors and the potential disparities in who benefits and bears the costs.
A measure of the volatility of a share in relation to the overall market. A share with a high beta coefficient is likely to respond to stock market movements by rising or falling in value by more than the market average.
Discounted Present Value (DPV) is a financial metric used to determine the current worth of a series of future cash flows, discounted back to their present value. It helps in evaluating the profitability and feasibility of investments and projects.
Earnings yield is the ratio of the earnings per share of a company to the market price of the share, expressed as a percentage. It is an important metric for evaluating the profitability of a company relative to its share price.
EBITDA is a measure of a company's overall financial performance and is used as an alternative to net income in some circumstances. It focuses on the earnings generated from the core business operations by excluding interest, taxes, depreciation, and amortization expenses.
The enterprise value (EV) of a company divided by its earnings before interest, taxation, depreciation, and amortization (EBITDA). This ratio is a crucial metric for assessing a company's overall financial health and investment potential.
Forward P/E is a valuation measure used by investors to gauge the price of a company's stock relative to its expected earnings per share over the next 12 months.
Fundamental analysis involves evaluating a company's financial statements, health, competitors, and markets to assess the intrinsic value of its stock. This method helps determine whether a stock is undervalued or overvalued.
The geometric mean is a measure of central tendency obtained by multiplying all the numbers in a set together and then taking the *n*th root of the resulting product, where *n* is the total number of values in the set.
A real estate valuation metric calculated by dividing the sales price of a property by its gross rental income, typically used to estimate the value of income-producing properties.
The hurdle rate is the minimum rate of return on an investment or project that a manager or company seeks to achieve before it generally discusses or explores the project. This rate is also known as the required rate of return or the benchmark rate.
Investment Analysis is the study and evaluation of the potential return and feasibility of a proposed investment. This process assists investors in making informed decisions by analyzing various metrics and methods to project future returns.
Investment value represents the estimated worth of an investment to a specific individual or institutional investor. It can differ from market value based on the unique circumstances and requirements of the investor.
A Market Index is a statistical measure that tracks the performance of a group of assets in order to provide a benchmark for the wider market or specific sectors of it.
A market letter is a newsletter provided by brokerage firms to their customers or sold by independent market analysts. The analysts are typically registered as investment advisers with the Securities and Exchange Commission (SEC). The market letter offers financial advice, market analysis, stock recommendations, and other investment-related information.
The Market-to-Book Ratio (M/B ratio) is a financial valuation metric used to compare a company's current market price to its book value, providing insights into how the market values the firm's assets.
Moody's Investors Service is a preeminent financial services company headquartered in downtown Manhattan. It stands among the three most well-known bond-rating agencies in the United States, alongside Fitch Ratings and Standard & Poor's.
Net asset value (NAV) represents a company's or mutual fund's per-share value, calculated by dividing the total value of assets minus total liabilities by the number of shares outstanding. It's an essential metric for investors to gauge the value of an individual share relative to its underlying assets.
The net asset value (NAV) represents the per-share value of a fund's assets minus its liabilities, used to measure the performance of mutual funds, ETFs, and similar investment vehicles.
Net Present Value (NPV) is a method of determining whether the expected financial performance of a proposed investment promises to be adequate. It assesses the profitability of an investment by comparing the present value of future cash flows to the initial investment.
The payout ratio represents the percentage of a firm's profits that is distributed to shareholders in the form of dividends. This metric provides insight into how much money a company returns to its shareholders compared to how much it retains for reinvestment and other corporate purposes.
Pencil Out refers to the practice of estimating in approximate figures whether a proposed investment or business opportunity is expected to be profitable. It involves making quick calculations to assess the potential financial viability of the venture.
A post-completion audit involves comparing the actual cash flows with the forecast cash flows for an investment to assess the validity of the initial financial projections and ultimately improve future investment decisions.
The Price-Earnings (P/E) Ratio is a financial metric that measures a company's current share price relative to its per-share earnings. This ratio is widely used by investors and analysts to evaluate the valuation of a company's stock.
The P/E ratio is a measure of a company's current share price relative to its per-share earnings, often used by investors to assess a company's valuation.
The Price-Earnings (P/E) Ratio signifies the price of a stock divided by its earnings per share (EPS), acting as a multiple. It offers insights into market expectations regarding a company’s future earning power.
The Price/Book Ratio is a financial metric used to evaluate if a stock is undervalued or overvalued by comparing the stock's market price to its book value per share.
Primary Earnings Per Share (EPS) is a commonly used metric in financial analysis that measures the profitability of a company by indicating how much profit has been allocated per outstanding share of common stock.
The Projection Period refers to the time duration used for estimating future cash flows and the resale proceeds from a proposed investment. Commonly used in financial analyses, it helps in forecasting and valuing investments, especially in real estate.
Quantitative Analysis involves using mathematical and statistical methods to evaluate investments, business operations, and financial data.
The Real Rate of Return is an investment's annual percentage profit that is adjusted for changes in prices due to inflation or other external factors. Unlike the nominal rate of return, which does not account for inflation, the real rate of return provides a more accurate measure of purchasing power.
Return on Equity (ROE) is a financial metric that assesses a company's ability to generate profit from its shareholders' equity. It is calculated by dividing net income by shareholders' equity.
Return on Equity (ROE) is a measure of financial performance, determined by dividing net income by shareholders' equity. ROE is an essential metric for evaluating a company's profitability and efficiency in generating profits from its equity.
Reversionary value refers to the estimated value of a property at the end of a predefined period of time, typically used in real estate and financial projections.
The simple rate of return measures the profitability of an investment by dividing the total earnings (income and capital gains) by the original amount invested. It is a straightforward way to assess the financial performance of an investment without considering compounding effects.
Terminal Value (TV) is an essential financial metric used to estimate the value of a business beyond the forecast period in a discounted cash flow (DCF) analysis.
The Throughput Accounting Ratio (TAR) is a key metric in Throughput Accounting, used to assess the value that an investment or business decision will create relative to its costs.
Yield to Call (YTC) refers to the yield on a bond or other fixed-income security assuming that the bond will be redeemed by the issuer at the first call date specified in the indenture agreement. YTC is particularly important for callable bonds, as it helps investors gauge the potential return if the bond is called before maturity.
Yield to Maturity (YTM), often referred to as Gross Redemption Yield, is a crucial financial metric for investors, reflecting the total return expected on a bond if held until it matures.
