Cash capital is the net worth of all cash that can be derived from investments in a portfolio. It is calculated by subtracting credits from debits and can be used to monitor the overall strength of the portfolio and individual assets. It can also be applied to evaluate the financial health of a company before […]
A shared equity mortgage is when a friend or family member helps with a down payment in exchange for equity in the home, typically benefiting parents who help their children. The helper receives a percentage of the home’s resale value and gain in value, but there are risks if the house depreciates or the borrower […]
The IFRS equity method is used for companies that own 20-50% of another company through equity investment. The reporting company must claim a percentage of the other company’s net income equal to the portion of the equity it owns. Differences exist between IFRS and GAAP standards. The IFRS equity method is an accounting style used […]
Equity arbitrage involves buying and selling shares of the same or similar stock to make a net profit, with traditional equity arbitrage involving buying and selling shares of the same stock priced differently in different markets. Variations, such as merger and pair swap arbitrage, carry some risk. Equity arbitrage is the buying and selling of […]
Customer-based brand equity (CBBE) assesses a brand’s value in the minds of customers, with equity being the sum of values associated with a brand. The CBBE model defines a hierarchy of customer impressions arranged in pyramid-shaped tiers, including salience, performance, images, meaning, judgments, feelings, and resonance. The model aims to create a more connected customer […]
Choose the best equity index fund by considering the type of stocks preferred, evaluating historical performance, and comparing pricing structures. Look for industry-specific or broad index funds for diversification and understand the fund’s approach and risks. To choose the best equity index fund, you can start by deciding the type of stocks you prefer to […]
Net asset turnover measures how efficiently a company turns its assets into revenue. It is calculated by dividing total revenue by total assets. A high ratio indicates efficiency, while a low ratio suggests inefficiency. However, ratios should be compared among similar companies in the same industry. Net asset turnover is a financial measurement that aims […]
A capital gift is when a property is sold to a loved one for less than the current market value, which can help the recipient secure favorable mortgage terms. Tax consequences may arise if the gift exceeds the annual limit. A capital gift is a situation where the property is sold to a loved one […]
Private equity analysts use financial modeling to value privately held companies for investment by their firms. They may perform due diligence, review financial statements, and analyze capital structure to maximize returns. A private equity analyst uses sophisticated financial modeling techniques to review the merits of investing in the stock of a privately held company. Most […]
Common equity measures the dollar amount invested by common shareholders in a company, including retained earnings and additional paid-in capital. It helps analysts gain a more accurate picture of a corporation’s financial stability and is calculated by adding the total sale of common shares outstanding to retained earnings. Monitoring common equity can provide information about […]
A stock index fund is a type of mutual fund that tracks the performance of a particular stock index, combining an equity fund and an index fund. It can be actively or passively managed and provides potential investors with the ability to reduce investment risk through portfolio diversification. A stock index fund is a type […]
Bridging equity is a short-term financing solution used to bridge the gap between a current financial situation and future financing. Private equity firms often use bridging capital to complete a leveraged buyout, while bridging loans can provide quick cash for individuals or companies with high interest rates and shorter repayment periods. Bridging equity refers to […]
External equity is how employees perceive a company’s compensation structure. Paying below market rate results in negative equity, while paying above it may not attract better employees. Companies can evaluate their external capital through internal and external HR factors. Compensation plans include wages/salaries and benefits, which can be used to raise external capital. The level […]
Brand equity and advertising are linked as companies use advertising to strengthen brand equity and create a link between consumer perception and the company. Two common strategies are brand extensions and consumer-based approaches, with the latter focusing on changing consumer perception. Successful brand retention can lead to lower advertising costs and word-of-mouth advertising. The means […]
Brand loyalty is a consumer’s desire to continue buying a specific brand, developed through marketing efforts, while brand equity is the positive perception of a brand built through advertising. Both are developed through consumer experience and marketing efforts, but loyalty takes longer to build. Manufacturers use marketing to create brand equity and may try to […]
Private investment in public equity (PIPE) is a financial arrangement where a company issues public securities to an investor at a price below market value to raise additional capital. PIPE deals can involve stocks, bonds, or convertible debt and can be advantageous for smaller companies. However, they have been scrutinized for potential insider trading and […]
Equity ratio measures a company’s leverage by comparing its liabilities to shareholders’ equity. A high debt to equity ratio indicates more debt financing, while a high equity ratio doesn’t necessarily mean low earnings. Industry type can also affect the ratio. An equity ratio is a financial calculation or ratio that determines the amount of leverage […]
A mid-cap fund is a mutual fund that invests in mid-cap stocks, typically companies with market capitalizations between $2 billion and $10 billion. This allows investors to diversify their portfolio and gain exposure to a highly valued segment of the market at a fraction of the cost. Mid-cap companies offer stability and growth potential, making […]
Equity infusion is when an investor injects funds into a start-up or ailing company. Capital infusion transfers money from a successful unit to a struggling one. Venture capitalists provide necessary funds to start-ups and companies in financial crisis. Equity infusion refers to the process by which an investor with a financial interest in the company […]
A gift of equity is when someone gives equity in a home to another person, often during a family home sale. Tax implications should be considered, and a letter must be signed by both parties. It can also be used as a down payment on a loan. A gift of equity is a situation where […]
