There are various methods of valuing bonds that companies may use. Among these, the prevalent method is using the amortized cost technique of valuation. However, some companies may also evaluate their bonds using the fair value method. There are some differences between both of them. It is better to understand …

Companies incur various expenses throughout their operations. Usually, companies must categorize each of them based on several factors. Among these, the most common classification is by nature. Companies may aggregate their expenses of similar nature for various reasons. Usually, companies use expense classifications to present several aspects of their profitability …

What is Net Income? Companies need to be profitable to stay in business. Therefore, they need to ensure their earnings exceed their expenses. Sometimes, it may not stand true. However, in the long run, it is crucial to maintain a positive net income. Companies can calculate their earnings by deducting …

What are Operating Costs? Operating costs are the expenses that relate to the maintenance and administration of the operations of a company or business. The operating costs of a company include its direct cost of goods sold and its overall operating expenses. Therefore, a company’s operating costs include its salaries …

Investors can use various ratios to calculate the value of their investments. Each of them illustrates a different aspect of the investment, which can help investors in their decision-making. Among these, one ratio is the price-to-book (P/B) ratio. What is the Price-to-Book Ratio? The price-to-book ratio is a comparison of …

Financial statements are crucial for any business. However, two financial statements are more relevant than others. These are the Balance Sheet and the Income Statement. Out of the five financial statements, these two are always a requirement and prepared by companies. Both of these statements, however, show different aspects of …

The price-to-earnings (P/E) ratio represents the relationship between the market value of the stock of a company and its earnings per share (EPS). It is one of the most commonly used and well-known ratios used by investors in valuing the stocks of a company. Other names for the P/E ratio …

On July 27, 2017 the Financial Conduct Authority, the U.K.’s top regulator, tasked with overseeing Libor, announced the benchmark will be phased out by 2021. Alternative risk-free rates are being set up for the different currencies. For the US Dollar, the US Fed’s Alternative Reference Rates Committee (ARRC) has recommended …

Introduction EBITDA, short for Earnings Before Interest, Taxes, Depreciation, and Amortization, is an indicator of the financial performance of a company. It is an alternative to the traditional measures of a company’s performance, such as operating profits. Similarly, it is also considered an alternative for the operational cash flows of …

A stock warrant is a financial contract between a company and investors, which gives them the right to purchase newly issued shares of a stock at a set price for a set period of time. The company directly issues the new stock instead of using issued stock. However, investors that get a …