What is Strategic Financial Management? Strategic financial management is a term used to describe the process of managing the finances of a company to meet its strategic goals. It is a management approach that uses different techniques and financial tools to devise a strategic plan. Strategic financial management ensures that the strategy chosen is implemented…
What is EBITA? EBITA is an acronym that refers to the earnings of a company before interest, tax, and amortization expenses are deducted. Investors use EBITA as an indicator to measure the profitability and efficiency of a company and compare it with similar companies. EBITA includes the cost of capital assets (depreciation) but excludes the…
What is Cross Holding? Cross holding, also referred to as cross shareholding, describes a situation where one publicly-traded company holds a significant number of shares of another publicly-traded company. The shares owned of the second publicly-traded company are referred to as a cross-holding of the first company. Cross holdings present potential valuation problems for financial…
What are Forward Points? Forward points are basis points that are added or subtracted to the spot rate, which is the market price quote of a commodity. If an investor was interested in purchasing a particular commodity, he or she would purchase it at the price it is quoted at the time of purchase. If…
What is Fixed Capital? Fixed capital, or fixed assets or capital assets, refers to a company’s long-term assets, such as land, buildings, or equipment that is used in producing goods or services. Understanding Fixed Capital The capital invested in such long-term operating assets is considered “fixed” because, unlike other assets (e.g., inventory of goods), the…
What are Foregone Earnings? Foregone earnings are potential earnings that could’ve been achieved but are absent due to charged fees, expenses, or lost time. An example is the investment costs incurred by an investor paying fees such as management fees for a mutual fund or exchange-traded fund (ETF) investment or commissions to a stock brokerage…
What is a Forward Premium? Forward premium occurs when the forward exchange rate is quoted higher than the spot exchange rate. The expectation of the market is that the domestic currency will be worth less in the future or will depreciate in value versus the foreign currency. To determine the forward premium, the difference between…
What is Social Networking? Social networking, in an online business context, is the usage of social media websites to connect with existing and potential customers to increase revenues and expand your business. The most frequently used social networking websites are Facebook, YouTube, and Twitter. Other popular social connection sites include LinkedIn, Instagram, Pinterest, and Snapchat….
What is a Subprime Loan? A subprime loan is a loan offered to individuals at an interest rate above prime, who do not qualify for conventional loans. Such individuals have low income, limited credit history, poor quality collateral, or poor credit. The subprime option is common in many different types of loans, including auto loans…
