What is Money Measurement Concept in Accounting?
The money measurement concept states that a corporation should only report those accounting transactions that can be represented in terms of money. It means that the focus of accounting transactions is on quantitative data rather than qualitative information. A high number of items are never reflected in a corporation’s accounting records, which suggests that they […]
Factors determining the credit policy of a firm
A company’s credit policy is vital in the management of cash flow, reduction of financial risks, and good customer relations. It establishes the terms upon which credit is offered to customers, such as payment terms, credit limits, and collection processes. A good credit policy balances increasing sales with the receipt of timely payments, thus affecting […]
What is a Hedge Fund – Meaning and Purpose
Hedge funds have long been a topic of intrigue and curiosity for many investors and financial enthusiasts. These investment vehicles, known for their complex strategies and substantial returns, often remain shrouded in mystery. But what exactly is a hedge fund? In simple terms, a hedge fund is an alternative investment vehicle that pools capital from […]
What are American Depositary Receipts (ADR)?
An American Depositary Receipt represents shares in a foreign company traded on U.S. exchanges, for instance, the New York Stock Exchange. Every ADR represents one or more shares of a foreign company. However, some ADRs represent a fraction of a share. Such receipts are issued by the U.S. depositary banks that hold the actual shares […]
How to Calculate Accounting Rate of Return [With Example]
When a company makes an investment it evaluates the financial feasibility of the investment. This process is called investment appraisal. Investment appraisal is a critical stage of investment because it allows the company to invest funds in the most optimal options. The investment appraisal approach is a way of appraising financial assets following their anticipated […]
What are various equity valuation methods?
The term equity valuation refers to the process of determining the fair market value of equity securities. In simpler terms, it’s figuring out what a company is truly worth to investors. There’s no single, perfect way to value a company. Different analysts use various methods and assumptions, leading to a range of possible values. In […]
Hedge Fund Strategies in Finance
You’ve probably heard the term “hedge fund,” but what exactly is it, and how do these firms make money? Unlike traditional investment funds that simply buy stocks and hope they go up, hedge funds use a wide array of sophisticated strategies to generate returns in any market condition. They can profit from both rising and […]
The Payback Period Method of Investment Appraisal
The payback period is the amount of time it takes to recover the investment’s initial outlay. In other words, it is the amount of time it takes for the project to break even. For example, if the said company invested $80,000 into an extension of its premises and it takes them five years to get […]
What are the Differences between Future and Options?
Futures and options are both types of financial derivatives that allow traders to speculate on the future price of an underlying asset. However, there are some key differences between the two. Futures A futures contract is a legally binding agreement to buy or sell an underlying asset at a predetermined price on a specified future […]
What is Financial Performance Measurement?
Financial Performance Measurement Financial performance measurement, also known as financial statement analysis, employs all available tools to demonstrate how essential things in a company’s financial statements are related to the company’s financial objectives. Individuals that have a significant interest in measuring a company’s financial success fall into this category. Separated into two categories: 1. A […]