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 …

A bond is a debt instrument issued by entities to obtain a loan. It comes with a fixed income, usually based on a fixed interest rate. Usually, companies use bonds to raise debt finance. However, other entities, such as government organizations may also issue bonds to gather funds. Overall, a …

A stock option is a contract between a company and its investors that gives them the right to buy or sell underlying stocks at a preset price within a specific time period. Just like ordinary stocks of a company, its stock options are also available for trade on stock exchanges. …

Convertible bonds are complex financial instruments. However, the accounting treatment for convertible bonds has been simplified. The Financial Accounting Standards Board (FASB) released new guidance last month on accounting for convertible instruments and contracts in an entity’s own equity… Convertible instruments are debt or equity instruments (or features) that either …

Is knowledge of accounting important in the field of quantitative finance?  We found some interesting discussions. A poster believes that it is important: Accounting is a vital skill if you end up in a managerial position, and unless your career goal is to always be a cog in someone else’s …