Correlation analysis is a tool used to test the relationship between various variables, either quantitative or categorical. It measures how these variables affect each other. Through analyzing the correlation between different variables, making predictions or estimates on future behaviours becomes less complex. When it comes to investing and finance, correlation …

The yield curve is a line that shows the yields of bonds that have different maturities. It helps investors graph the yields of multiple bonds to estimate future interest rate changes and economic activity. When it comes to the curves plotted on the graph, investors can get three shapes. The …

The Price-to-Cash flow (P/CF) ratio is a metric that compares the prices of a company’s stock with its operating cash flows. While it is not as popular as the Price-to-Earnings (P/E) ratio, it is still a valuable tool that investors have at their discretion. It is one of the many …

The easiest method for investors to generate income from their investments is to invest in risk-free instruments. It allows investors to earn money without having to take risks. However, the returns on these investments are lower as compared to others. If investors want to make higher returns, they must accept …

When it comes to evaluating companies, investors have many tools that they can use. Among these, two of the most common ones are Enterprise Value and Market Cap. Using these tools, investors can make better decisions. However, investors must understand what each of these is and when to use them. …

Market efficiency represents the degree of the relationship between the prices of commodities or items in a particular market to the information available in the market. Usually, an efficient market is one where the prices reflect all the available information in the market and do not have any inefficiencies. An …

When it comes to investments, two concepts go hand-in-hand, risk and return. It is because both of these are mostly related to and impact each other. Every time an investor includes new investments in their portfolios, they consider the risks and returns on the investment. Therefore, it is crucial to …

The Sharpe Ratio, named after its founder and American economist William Sharpe, is a metric used by investors to find the relationship between the risks and returns of their investment. It is also known as the Sharpe Index or the Modified Sharpe Ratio. The relationship between the risks and returns …

The Debt to Equity (D/E) ratio is a straightforward metric that calculates the proportion of the debt of a company relative to its equity. In simple words, it is the ratio of the total liabilities of a company and its shareholders’ equity. It is one of the most favourite metrics …

Liabilities are the obligations of a business to third-parties that it must settle in the future through some form of compensation. These may include loans taken from financial institutions or credit purchases made from suppliers. Based on their life, liabilities can either be long-term, known as non-current liabilities, or short-term, …