What is the Earnings Multiplier? The earnings multiplier, or the price-to-earnings ratio, is a method used to compare a company’s current share price to its earnings per share (EPS). It is used as a valuation tool to compare the share price of a company with that of similar companies. The earnings multiplier also shows how…
What is a Moratorium? A moratorium refers to the delay or temporary deferral of a law or an activity. It can be enforced by either a business or a government. A moratorium continues to be in force until the issues causing its enforcement are solved. Moratoriums can also be imposed to delay debt payments under…
What is an Earnings Estimate? An earnings estimate is the estimate of a firm’s earnings per share (EPS) for the upcoming quarter or fiscal year and is reported by an analyst. Earnings estimates are developed by analysts who are working for investment research firms. Using the earnings estimate, analysts can evaluate the cash flow and…
What is Sustainable Investing? Sustainable investing is the practice of making capital allocation decisions based on socially responsible and ethical strategies to ensure that portfolio companies maintain a high standard of sustainability principles. Investing through ESG (Environmental, Social, and Governance) principles constitute part of sustainable investing and have become increasingly popular over the years. Investors…
What is Multilevel Marketing (MLM)? Multilevel marketing (MLM) is a strategy that sells products and services through a non-salaried workforce in a pyramid-shaped commission system. The MLM strategy is also known as network marketing or referral marketing. Companies that implement multilevel marketing encourage existing distributors to recruit new distributors, known as the “downline” of the…
What is Voluntary Foreclosure? A voluntary foreclosure refers to a foreclosure initiated by a borrower. The borrower willingly enters a foreclosure because they are unable to make loan payments, or they wish to avoid making any future payments. Possession of the property is transferred from the borrower to the lender. If the borrower struggles to…
What is a Voluntary Lien? A voluntary lien is a lien where the owner of a property consensually grants another party legal claim to the property as security for the repayment of a debt. The debtor voluntarily grants the lien to the lender, and the property acts as collateral. If a debtor defaulted on making…
What is Negative Confirmation? Negative confirmation is a common industry practice for auditors to gather audit evidence from external stakeholders. A negative confirmation is a letter addressed to a debtor, requesting a response if the debtor disagrees with the stated account balance. Confirmation occurs if the third party doesn’t respond, or when a correction is…
What is Multicollinearity? Multicollinearity is a term used in data analytics that describes the occurrence of two exploratory variables in a linear regression model that is found to be correlated through adequate analysis and a predetermined degree of accuracy. The variables are independent and are found to be correlated in some regard. Multicollinearity is studied…
What is a Mutual Company? A mutual company is a type of company wherein the ownership is held by the depositors, customers, or policyholders of an institution. A mutual company’s structure is different from other types of companies like a privately-held organization or public company. Mutual companies distribute income among its members/owners, generally directly within…
