In exceptional situations, the central bank may provide funds to cover the short-term shortfall as lender of last resort. In modern economies, the creation of money is inextricably tied up with the creation of credit, or the process of lending by co... Read more
Quite apart from their potential for creating value, share buybacks can also offer companies a shareholder-friendly way to distribute cash. That’s because, in the United States at least, many investors are taxed more highly on cash dividends t... Read more
Hydro One, a large company, has a relatively small risk group to generate risk awareness and communication throughout the firm and to advise the executive team on risk-based resource allocations. Whether it's a people or process failure, these opera... Read more
While high inventory turnover can mean high sales volumes, it can also mean that you're not keeping enough inventory in stock to meet demand. Inventory is one of the most important aspects a business should track. Today, you can use software to trac... Read more
Acquisitions are typically financed with a lot of debt that ends up being owed by the acquired company. That means the PE firm and its investors can put in a comparatively small amount of cash, magnifying gains if they sell at a profit. The liquidit... Read more
An accounting degree requires deep education and training in tax and other laws with which businesses need to comply, plus finance and business management. While some bookkeepers may have developed similar skills, that level of training isn’t... Read more
As stated above, the percentage of the haircut is determined by both the counterparty's credit quality and the market risk of the collateral. Also, the term haircut is used when borrowing countries restructure debt by trimming repayments. Countries... Read more
But unlike a sole proprietorship, the business and the owner are legally separate, and the owner isn’t responsible for the liabilities of the LLC. First, private companies don’t raise capital by issuing public equity and debt securities.... Read more
The cash ratio is the strictest measure of a company's liquidity because it only accounts for cash and cash equivalents in the numerator. Below is a video explanation of how to calculate the current ratio and why it matters when performing an analys... Read more
When applying alpha, it's important to compare funds within the same asset class. Comparing funds from one asset class (i.e., large-cap growth) against a fund from another asset class (i.e., emerging markets) is meaningless because you are essential... Read more
