What is Common Size Analysis? Common size analysis, also referred to as vertical analysis, is a tool that financial managers use to analyze financial statements. It evaluates financial statements by expressing each line item as a percentage of a base amount for that period. The analysis helps to understand the impact of each item in…
What is the Bank for International Settlements (BIS)? The Bank for International Settlements (BIS) started in 1930 and is owned by the central banks of different countries. It serves as a bank for member central banks, and its role is to foster international monetary and financial stability and financial corporation. The Bank for International Settlements…
What is the NASDAQ-100 Index? The NASDAQ-100 Index is a stock market index that includes 100 of the largest, most actively traded, non-financial companies that are listed on the Nasdaq Stock Market. A stock market index helps investors compare current and past price levels in order to calculate the overall market’s performance. The NASDAQ-100 Index…
What is an Auditor? An auditor is a person or a firm assigned to perform an audit on an organization. An audit is a structured, methodical process that includes an examination of books, accounts, records, or various documents. The audit can be on any topic. However, from a financial perspective, an auditor will examine the…
What is an Activist Investor? An activist investor is an individual or institutional investor that seeks to acquire a controlling interest in a target company by gaining seats on the company’s board of directors. Activist investors are looking to make significant changes to the target company and unlock perceived hidden value within the target company….
What is a Naked Call? A naked call is a type of option strategy where an investor writes (sells) a call option without the security of owning the underlying stock. The investor must take the short side of the call option in order to deliver shares of the underlying security if the option is exercised…
What is Earnings Season? Earnings season is the time during which publicly traded companies announce their financial results in the market. The time occurs at the end of every quarter, i.e., four times a year for U.S. companies. Companies in other regions have different reporting periods, such as Europe, where companies report semi-annually. Timing of…
What is Equity Risk Premium? Equity Risk Premium is the difference between returns on equity/individual stock and the risk-free rate of return. The risk-free rate of return can be benchmarked to longer-term government bonds, assuming zero default risk by the government. It is the excess return a stock pays to the holder over and above…
What is Weighted Average Shares Outstanding? Weighted average shares outstanding refers to the number of shares of a company calculated after adjusting for changes in the share capital over a reporting period. The number of shares of a company outstanding is not constant and may change at various times throughout the year, due to a share…
The Dividend vs Share Buyback Debate Shareholders invest in publicly traded companies for capital appreciation and income. There are two main ways in which a company returns profits to its shareholders – Cash Dividends and Share Buybacks. The reasons that drive the strategic decision on dividend vs share buyback differ from company to company and…
