The importance of gearing ratios in financial analysis
Financial gearing ratios are financial metrics that compare a firm’s debt to other financial metrics such as company equity and assets. The primary purpose of evaluating financial gearing ratios is to Measure the Company’s financial leverage level and determine the degree of company activities financed by shareholders’ equity compared with credit finance. Gearing ratio analysis […]
What is a Stock Exchange? Features and Functions
The stock exchange is an essential part of the financial system that allows investors to buy and sell securities such as stocks, bonds, and other financial instruments. The stock exchange provides a platform for companies to raise capital and for investors to earn investment returns. In this article, we will explain the features and functions […]
What Are the Different Types of Dividends
Dividends are a key way for companies to distribute profits to their shareholders. When a company generates earnings, it has a few options for what to do. It can reinvest them in the business, pay down debt, or distribute them to shareholders. Dividends are one-way companies reward shareholders for investing in their business. There are […]
What is Window Dressing of Financial Statements?
The window dressing of financial statements is a term that refers to the manipulation of financial information in order to make a company appear more financially stable than it actually is. This practice is unethical and can damage investors, creditors, and other stakeholders. In this article, we will define what window dressing is, provide examples […]
Differences Between Rights and Bonus Issues of Shares
When firms are attempting to raise new capital or distribute earnings to current shareholders, they issue extra shares in rights issues or bonus issues. In spite of distributing new shares as a method behind both approaches, they differ based on intent as well as shareholders’ effects. A rights issue enables existing shareholders to buy extra […]
What is the Profitability Index?
The Profitability Index is simply the profitability of an investment expressed as a percentage of the total return of the investment. The profitability index assists in assessing investments and determining the optimal investment to make. PI larger than one shows that the present value of future cash flows from the investment exceeds the initial investment, […]
What are Debentures and Why Are They Issued?
Debentures are a type of corporate bond that is created by companies. The money borrowed to create debentures is called the face value. In exchange for the money, the company agrees to pay interest on debentures over a fixed period of time. Once the debenture matures, the company has to pay back the face value […]
What are Different Types of Financial Statements?
Financial statements provide essential tools for understanding an entity’s health and performance from various angles, whether you are an investor, creditor, stakeholder, or otherwise. The primary purpose of financial statements is to present the financial information of a company in a reliable and useful format. Financial statements provide a detailed picture of a company’s financial […]
What Are Sweat Equity Shares and Why Are They Issued?
Sweat equity shares are equity shares granted to employees of a company on favourable terms in recognition of their work. Sweat equity shares are one form of share-based compensation for employees. The beneficiaries of sweat equity shares receive incentives in exchange for their contributions to the company’s growth. Moreover, sweat equity shares encourage employees to […]
What is the Procedure to Issue Shares for Capital?
Companies issue shares to raise capital to finance their operations, such as expanding their business, developing new products, or entering new markets. When a company issues shares, it is essentially selling a piece of ownership in the company to investors. In exchange for their investment, shareholders receive a share of the company’s profits, or dividends, if the company is profitable. Typical Procedure to […]