What is Share Capital and How Does it Work?
A share is a unit of ownership in a company that represents a portion of that company’s total value and assets. Each share has a nominal or par value. A firm uses shares to obtain funds, and each share represents a unit of ownership that is offered for sale. A share represents a portion of […]
What are the benefits of business valuation?
Business Valuation A business valuation is a method for determining the value of a company and its assets. When deciding to sell their firm, the vast majority of business owners undergo an evaluation. Other causes include mergers, organisational reorganisation, and the breakdown of partnerships.Regarding the value of a firm, several factors must be taken into […]
What is valuation, and why is there a need for valuation?
Valuation is appraising or determining the worth of physical or intangible assets, securities, liabilities, and a particular firm as a going concern or any listed or unlisted corporation, partnership, or sole proprietorship. The word ‘value’ refers to an object’s material or monetary worth, which may be measured in terms of the medium of exchange. Valuation […]
What is the Price Earnings Ratio?
The Price Earnings ratio is defined as a ration that tells investors how much they’re paying for each dollar of a company’s earnings. For example, a P/E of 20 means investors are willing to pay $20 for every $1 of current earnings. This ratio is widely used in the market because it provides investors with […]
What are zero coupon bonds and why do people invest in them?
What is a Bond? A bond is an obligation of a government, a company or an individual to pay a sum of money back to you at some time in the future, often with interest. Normally this sum would be repaid in small amounts on a regular basis, for example, a weekly payment. A bond […]
Meaning of Purchase Consideration [Amalgamation Accounting]
In business purchase accounting, the meaning of purchase consideration is the price that is paid for the acquisition of another company. This price can be paid in cash, shares, or other assets. The purchase consideration is used to determine the value of the assets and liabilities acquired in the purchase. Limited liability companies often purchase […]
Meaning and Types of Solvency Ratios
Solvency ratios are financial measurements used to assess a company’s ability to meet its long-term obligations and remain financially stable. These ratios evaluate a company’s ability to generate adequate cash flows to cover its debt and other financial obligations. By analyzing solvency ratios, investors and lenders can gauge the financial health and stability of a […]
What is the Price Yield Relationship?
The Price Yield Relationship (also known as the price yield equation) refers to the relationship between the price of a security and its yield. The price yield relationship is an inverse relationship between the price of a security and its yield. The higher the security price, the lower the yield, and vice versa. In other […]
MCQ with Answers about Bonds and Bonds Value
Bonds and Bonds Value Quiz A) Coupon B) Face value. C) Maturity D) Yield to maturity. E) Coupon rate. Answer: A 2. The principal amount of a bond that is repaid at the end of the loan term is called the bond’s:A) Coupon B) Face value C) Maturity D) Yield to maturity E) Coupon rate. […]
Internal rate of return method for investment appraisal
The Internal Rate of Return (IRR) is one of the most common methods for investment appraisal. IRR is also known as the Internal Capitalization Rate. It is one of the more straightforward methods for valuing an investment and is easily derived from the net present value (NPV) method and discounted cash flow (DCF) models. It […]