What is Market Cap? Market capitalization, commonly referred to as market cap, is an important financial metric used to determine the size and value of a publicly traded company. Market Cap refers to the total market value of a company's outstanding equity shares. Essentially, it is the total equity market value of a
What is beta, levered beta and unlevered beta? Beta is a measure of the systematic risk associated with investing in a particular asset or security. It indicates how sensitive an investment's returns are to the overall fluctuations in the market. Beta is an important concept in corporate finance and investment analysis as it
What is CAPEX and OPEX? Capital expenditures (CAPEX) and operating expenses (OPEX) are two important items from a company’s cash flow and income statement (respectively). They are both key financial metrics that companies use to budget, forecast, and analyse their spending. Understanding the difference between CAPEX and OPEX is especially important for making
Perpetuities: Definitions, Concepts and Examples Perpetuities are an important concept in corporate finance and investment analysis. A perpetuity is a constant stream of cash flows that continues indefinitely into the future. Understanding perpetuities allows financial analysts to properly value assets and investment opportunities that involve long-term, ongoing cash flows. They are one the
Discount Rate Guide: Definitions, Formulas, Examples The discount rate is a crucial concept in corporate finance and investment appraisal. It is used to determine the net present value (NPV) of future cash flows thus accounting for the time value of money and enabling the comparison of projects and investments with cash flows spread over
Liquidity Ratios Guide: Types, Formulas and Examples Liquidity ratios are an important set of financial metrics used to analyse a company's ability to cover its short-term obligations. Companies fail not due to lack of profits in most cases, but due to their inability to meet their short-term cash requirements – i.e. they fail
Time Value of Money (TVM): Examples, Relevant Formulas and Interpretation Time Value of Money (TVM) is a core corporate finance concept that refers to the principle that money available now is worth more than the same amount in the future, due to its potential earning capacity today. The TVM concept underlies all calculations
Net Present Value (NPV) Explained: Definitions, Formula and Examples Net present value (NPV) is a core concept in corporate finance and investment analysis. It is a project / investments appraisal technique that is considered to be fundamentally the most robust, and consistent with the concept of enhancing shareholder value in investment appraisal. By
Bond Duration Guide: Definitions, Concepts and Examples Bond duration is a key concept in investment management and corporate finance that allows investors and financial professionals to measure the sensitivity of a bond's price to changes in interest rates. Understanding duration is crucial for assessing the amount of risk associated with a bond investment
Gearing Ratio Explained: Definitions, Formulas, and Examples Gearing ratio is an important financial metric that measures the level of debt used to finance a company’s assets and operations relative to equity. The gearing ratio gives insight into a company’s financial leverage and helps evaluate its financial risk. It doesn’t have an agreed textbook
