The shareholders buy shares with the expectations of receiving dividends and increase in the value of the shares. A conscious investor buys shares when they are undervalued and sell them when they are overvalued. Under valuation means the shares’ true value is more than their market value and overvaluation means their true value is less [...]
Just like a person working for some one expects remuneration or a landlord expects rent from tenant, the provider of funds also expects return. Two types of funds providers exist. One who takes the risk and provides funds for sharing profit or loss. The average expectancy of profit or loss is relatively high in this [...]
Average a simple but important tool for decision making which is used by almost every individual, businessman, and even institutions on daily basis. It would be hard to find a person on this planet who ever have not been used averages to know daily, monthly, or yearly income and expenses or to analyze any information [...]
In general terms financial market is a mechanism of delivering savings from the households, governments, and corporations to the users of these funds. Financial markets and financial assets exist in an economy because the savings of various individuals and institutions during a period of time differ from their investment in real assets. By real assets, [...]
A fund managed by an investment company which lifts up capital from financier and invests in a pool of assets. Just like a listed company the mutual funds also raise money by selling shares of the fund and purchase various investment securities such as stocks, bonds and money market instruments. In return to the investment [...]
First in first out is the method of inventory valuation. As the name implies under FIFO method the first unit of raw material received in the stock is to be issued first to manufacturing department. In other words it assumes that the material is issued from the oldest supplies. FIFO follows the belief that each [...]
Management and shareholders are mainly concerned for the long term returns over investment. In a stable economy where some degree of certainty prevails companies prefer to invest in long term projects which require heavy investments initially and return is expected after or in many years to come. In a situation where inflation rates are high [...]
The capital structure of a firm comprises of three financing components i.e. shareholders’ funds (including retained earnings), borrowed funds, and preference shareholders funds. All capital components have one feature in common i.e. the investors who provided the funds expect to receive return on their investments. The companies have to bear cost of using these funds [...]
Return on Assets ratio is one of the profitability ratio used to determine the utilization of Assets by the company to generate profits.Higher the value of ROA better is the usage of assets to make profit. The ROA is calculated by dividing the net income with total assets of the company. Total assets figure is [...]
If a person show you a home and tells that he is the owner of that home worth 2 Million dollars. After this statement you may ask the person “ Whether the home is 100 % self financed or you took money from bank or someone else?”. The person can either tell you that 100 [...]