In finance terms, consolidation refers to the incorporation of the financial statements of all subsidiaries into the financial statements of the parent company. Consolidation of financial statements requires the parent company to integrate and combine all its financials to create a standard-form income statement, balance sheet, and cash flow statement, Read more…
There’s a widespread assumption in investing that more risk equals increased potential returns. The theory behind the Efficient Frontier and Optimal Portfolios states that there’s an optimal combination of risk and return. The theory relies on the assumption that investors prefer portfolios that generate the most substantial possible return with Read more…
The core underlying principle of IAS 36 Impairment of Assets is that an asset’s carrying value in the financial statements of the company should not exceed the highest amount the business can recover through its use or sale. The standard applies to all assets for which there are no impairment Read more…
With a reach in e-commerce, cloud computing, digital streaming, and artificial intelligence, Amazon is now one of the largest corporations in the world. Analysts often refer to it as one of the most influential economic forces in the world. Alongside Google, Microsoft, and Apple, Amazon is considered one of the Read more…
Introduction Opportunity cost represents the benefits the business misses out on when picking between alternatives. When we have two desirable options, the benefit from the one not chosen is our opportunity cost. These costs are usually the result of bottlenecks in business processes. Therefore, finance professionals use Opportunity Cost analysis Read more…
The Net Present Value (NPV) is a profitability measure we use to figure out the present value of all expected future cash flows a project or investment will generate, including the initial capital we invest. It shows us the difference between the current value of cash inflows and outflows over Read more…
Introduction We perform a liquidity ratio analysis to evaluate the ability of the company to settle its obligations on time. The most common use case is when lenders and creditors want to gain a better understanding of the financial health of a borrower or customer. Analysts use the gained insights Read more…
Introduction Investors are continually evaluating different investments, trying to identify the ones that will maximize their returns and wealth. Analysts consider the Compound Annual Growth Rate (CAGR) as one of the most accurate ways to calculate the return for any investment with a value that changes over time. CAGR represents Read more…
Introduction Most significant new projects for a business require investments in Working Capital, and this harms a company’s cash flow. Proper cash management is essential if we want the company to continue to operate in the future. A business can be profitable, but if it can’t keep cash on hand, Read more…
Introduction to the Dividend Discount Model The Dividend Discount Model (DDM) is used to estimate the price of a company’s stocks. The model is based on the theory that the present value of the stock is equal to the present value of all future dividend payments when discounted back to Read more…
