What is Vertical Integration? Vertical integration is when a firm extends its operations within its supply chain. It means that a vertically integrated company will bring in previously outsourced operations in-house. The direction of vertical integration can either be upstream (backward) or downstream (forward). It can be achieved either by internally developing an extended production…
What is a Vertical Merger? A vertical merger is a union between two companies in the same industry but at different stages of the production process. In other words, a vertical merger is the combination and integration of two or more companies that are involved in different stages of the supply chain in the production…
What is Total Addressable Market (TAM)? Total Addressable Market (TAM), also referred to as total available market, is the overall revenue opportunity that is available for a product or service if 100% market share is achieved. Because it represents the potential opportunity, it is often used to determine the level of funding or resources that…
What is the Autoregressive Integrated Moving Average (ARIMA)? The Autoregressive Integrated Moving Average (ARIMA) model uses time-series data and statistical analysis to interpret the data and make future predictions. The ARIMA model aims to explain data by using time series data on its past values and uses linear regression to make predictions. Understanding the ARIMA…
What is Adjusted Beta? Adjusted beta tends to estimate a security’s future beta. It is a historical beta adjusted to reflect the tendency of beta to be mean-reverting – the CAPM’s beta value will move towards the market average of 1 over time. The beta estimate based purely on historical data – known as the…
What is the Net Debt-to-EBITDA Ratio? The net debt-to-EBITDA ratio measures a company’s ability to pay off its liabilities. It shows how much time the company needs to operate at the current debt and EBITDA levels to pay all of its debt. The net debt-to-EBITDA ratio is similar to the debt-to-EBITDA ratio in that it…
What is the Vasicek Interest Rate Model? The Vasicek Interest Rate Model is a mathematical model that tracks and models the evolution of interest rates. It is a one-factor short-rate model and assumes that the movement of interest rates can be modeled based on a single stochastic (or random) factor – the market risk factor….
What is a Non-Qualified Stock Option (NSO)? A non-qualified stock option (NSO) is a type of stock option used by employers to compensate and incentivize employees. It is also a type of stock-based compensation. Unlike incentive stock options (ISOs), which come with special tax benefits, holders of non-qualified stock options are required to pay taxes…
What is Non-Competitive Tender? Non-competitive tenders are a way of purchasing U.S. Treasury securities through non-competitive bids that do not state a particular price or yield for the security. Instead, investors rely on competitive bidders to set an average “market” price and offer to purchase a specific amount of Treasury securities at that price. The…
What is a Nonaccrual Loan? A nonaccrual loan, or non-performing loan – sometimes referred to colloquially as a doubtful, sour, or troubled loan – is a loan that is overdue on payments. The reason for the more colloquial “doubtful” and “troubled” terminology is that the lending institution is doubtful about whether the loan will be…
