Financial Ratios

The financial statements of the business entities are just a starting point for the analysis of the company’s financial health. An investor cannot decide which organization is better to invest in due to differences in accounting methods, capital structures, business strategies, etc. What is a viable way to determine a company’s financial health compared to […]

Every investor has a different perspective when it comes to making an investment. But one thing is constant that is considering the intrinsic value of stock than market value. Although, the day traders are not much interested in the growth potential of a stock. Instead, they invest their money on the market trend of a

The hurdle rate is the rate of return required by investors on some particular project under consideration. It’s an excellent tool to measure the potential of the investment project. It helps decide if the project should be accepted considering expected returns to be generated from the investment proposal. Generally, the investment projects with higher risk

Any business that wants to scale and grow needs financial stability. The financial health of any business entity is very critical to determine the scaling potential. Any company struggling to meet its day-to-day expenses cannot dream of becoming one of the top 100 Fortune companies. Any investor, creditor, or banker will only invest in your

Definition Business Finance involves a number of different metrics. Beta is considered to be one of the most important concepts in business finance. As a matter of fact, Beta is defined as a measure of volatility that a business faces with respect to other factors. Furthermore, it encapsulates the systematic risk of an underlying security

Definition: Price to Earnings Ratio is a very important metric that is used by investors in order to gauge the viability of a particular stock. This particular stock draws a comparison between the price of the particular share and the earnings that the company has reported over the course of time. This ratio is basically

Definition: Loan Loss Reserve Ratio is described as the ratio used in the bank to represent the reserve that the company has in percentage terms to cover the estimated losses that they would have suffered as a result of defaulted loans. The nature of the Loan Loss account is described as a contra account to

Definition: Financial Self-Sufficiency is a ratio that is used in order to evaluate if the company is able to generate enough revenue to cover its costs while ensuring that the equity value is sustained, after incorporating inflation, and another cost of capital. This particular ratio is considered to be a very useful metric in terms