Break-up value represents the asset value assuming an organization discontinues its business operations. Typically calculated for assets sold piecemeal, the break-up value encompasses the asset value per share and can affect financial decision-making.
Capital rationing occurs when managers have insufficient funds to invest in all projects with a positive net present value (NPV). It requires prioritization of projects to maximize NPV. It is classified into soft and hard capital rationing depending on whether constraints are self-imposed or external, respectively.
An economist is a professional who studies and analyzes economic data and trends to provide insights and forecasts regarding economic matters, influencing policy, investment decisions, and business strategies.
A financial ratio is a comparative figure that helps in analyzing the financial health, performance, and viability of a company. Very often, they are used to make informed business and investment decisions.
An in-depth look at incremental cash flow, its significance in differential analysis, how it impacts decision-making, and real-life applications.
Projects that are independent of each other in a comparative appraisal and are not mutually exclusive, allowing for the possibility of pursuing all given favorable circumstances.
An intermediary acts as a go-between in various capacity including executive recruiters, brokers and financial institutions that facilitate investment decisions on behalf of others.
An Investment Counsel is responsible for providing investment advice to clients and executing investment decisions. This can include financial planners, stockbrokers, and other financial professionals performing similar functions.
Market Timing refers to the strategic decision-making process of buying or selling securities based on economic conditions, interest rates, stock price directions, and trading volumes.
Mutually exclusive projects refer to a set of project alternatives where the selection of one project precludes the inclusion of the others due to constraints such as land or resources. For instance, using a parcel of land to build a factory means it cannot be used for an office block.
The Prudent-Man Rule is a legal standard adopted by some U.S. states to guide fiduciaries in making investment decisions, emphasizing discretion and intelligence in seeking reasonable income, preserving capital, and avoiding speculative investments.
Residual Equity Theory emphasizes the rights and interests of ordinary shareholders, viewing them as the real owners of a business. It reflects in earnings per share, aiding shareholder investment decisions. This theory positions itself between the proprietary view and the entity view of a company.
The measurement and analysis of the risk associated with business, financial, and investment decisions. It involves the identification of risk, the classification of risks in regard to their impact and likelihood, and a consideration of how they might best be managed.
In capital budgeting and portfolio management, the risk-adjusted discount rate is the discount rate used in calculations of present value to reflect the level of risk embodied in the cash flows being considered.
Tobin's Q is a ratio developed by Nobel laureate James Tobin to understand the relationship between the market value and replacement value of a firm's assets.
Valuation is the process of determining the current worth or price of an asset or a company. This act is pivotal in finance and investing, influencing decisions ranging from purchasing securities to compliance with regulations.
A financial metric used to gauge the average cost of capital by weighting each capital component proportionally.
