What is Add-On Interest? Add-on interest refers to the calculation method of determining the total interest to be paid on a loan. Once the interest’s been added to the principal, the amount is divided by the number of months in the duration of the loan to determine the amount of the monthly loan payment. How…
What is Competitive Advantage? Competitive advantage refers to the ways that a company can produce goods or deliver services better than its competitors. It allows a company to achieve superior margins and generate value for the company and its shareholders. A competitive advantage is something that cannot be easily replicated and is exclusive to a…
What is the Bargaining Power of Buyers? The Bargaining Power of Buyers, one of the forces in Porter’s Five Forces Industry Analysis framework, refers to the pressure that customers/consumers can put on businesses to get them to provide higher quality products, better customer service, and/or lower prices. It is important to keep in mind that…
What are Exit Strategies? Exit strategies are plans executed by business owners, investors, traders, or venture capitalists to liquidate their position in a financial asset upon meeting certain criteria. An exit plan is how an investor plans to get out of an investment. When Are Exit Strategies Used? An exit plan may be used…
What is Market Positioning? Market Positioning refers to the ability to influence consumer perception regarding a brand or product relative to competitors. The objective of market positioning is to establish the image or identity of a brand or product so that consumers perceive it in a certain way. For example: A handbag maker may position…
What is Visibility in the Business Context? In business, visibility refers to the extent to which a company can estimate its future performance. While it is a very broad term that applies to both short-term and long-term performance, having visibility into the organization greatly helps management to run a business better. High…
What is the Delphi Method? The Delphi method, also known as the estimate-talk-estimate technique (ETE), is a systematic and qualitative method of forecasting by collecting opinions from a group of experts through several rounds of questions. The Delphi method relies on experts who are knowledgeable about a certain topic so they can forecast the outcome…
What is a Dividend Rate? The dividend rate is the amount of cash returned by a company to its stockholders on an annual basis as a percentage of the market value of the company. The cash returned to investors is called a dividend, hence the term dividend rate. Dividend Rate Formula The dividend rate can…
A negotiable instrument ensures payment of a specified amount to a designated person, either on-demand or at a set time. It functions like a contract, containing vital details like principal amount and signatures. Unlike non-negotiable instruments, negotiable instruments can be transferred, granting the new holder full legal rights. Various types exist, including personal checks, traveler’s…
