What are Stock Warrants? Stock warrants are options issued by a company that trades on an exchange and give investors the right (but not obligation) to purchase company stock at a specific price within a specified time period. When an investor exercises a warrant, they purchase the stock, and the proceeds are a source of…
What is EBIT? EBIT stands for Earnings Before Interest and Taxes and is one of the last subtotals in the income statement before net income. EBIT is also sometimes referred to as operating income and is called this because it’s found by deducting all operating expenses (production and non-production costs) from sales revenue. Dividing EBIT by sales…
What is Corporate Finance? Corporate finance deals with the capital structure of a corporation, including its funding and the actions that management takes to increase the value of the company. Corporate finance also includes the tools and analysis utilized to prioritize and distribute financial resources. The ultimate purpose of corporate finance is to maximize the…
What is the Significance of Investor Influence? The level of investor influence a company holds in an investment transaction determines the method of accounting for said private investment. The accounting for the investment varies with the level of control the investor possesses. What are the Varying Levels of Control? An investor can hold majority ownership or…
What is an Investment? A financial investment is any asset or instrument purchased with the intention of selling said asset for a price higher than the purchase price at some future point in time (capital gains), or with the hope that the asset will directly bring in income (such as rental income or dividends). This…
What is Distressed Debt? Distressed debt refers to the securities of a government or company that has either defaulted, is under bankruptcy protection, or is in financial distress and moving toward the aforementioned situations in the near future. It includes all credit instruments that are trading at a significant discount and have a spread substantially…
What is Settlement Period? Settlement date is a term used in the securities industry to refer to the period between the transaction date when an order is executed to the settlement date when the security changes hands and payment is made. When the seller and the buyer enter into a trade, each party in the…
What is Settlement Date? Settlement date is an industry term that refers to the date when a trade or derivative contract is deemed final, and the seller must transfer the ownership of the security to the buyer against the appropriate payment for the asset. It is the actual date when the seller completes the transfer…
What is Sales Risk? Sales risk refers to the uncertainty relating to the price and quantity of goods that are available for sale to consumers. Usually, sales risk may result in sales failures, and it can significantly affect the reported financial performance. Protecting the business against the sales risk can help build resilience in a…
