What is the Inventory Turnover Ratio? The inventory turnover ratio, also known as the stock turnover ratio, is an efficiency ratio that measures how efficiently inventory is managed. The inventory turnover ratio formula is equal to the cost of goods sold divided by total or average inventory to show how many times inventory is “turned” or sold…
What is a Stakeholder vs. Shareholder? The terms “stakeholder” and “shareholder” are often used interchangeably in the business environment. Looking closely at the meanings of stakeholder vs. shareholder, there are key differences in usage. Generally, a shareholder is a stakeholder of the company while a stakeholder is not necessarily a shareholder. A shareholder is a…
What is MIBOR? The Mumbai Inter-Bank Offered Rate (MIBOR) is the interest rate benchmark at which banks borrow unsecured funds from one another in the Indian interbank market. It is currently used as a reference rate for corporate debentures, term deposits, forward rate agreements, interest rate swaps, and floating-rate notes. The rate is only offered…
What is a Leveraged Buyout (LBO)? In corporate finance, a leveraged buyout (LBO) is a transaction where a company is acquired using debt as the main source of consideration. These transactions typically occur when a private equity (PE) firm borrows as much as they can from a variety of lenders (up to 70 or 80 percent of the…
What are Hedge Fund Strategies? In this article, we will explore the main hedge fund strategies. But first, what is a hedge fund? A hedge fund is an investment fund created by accredited investors and institutional investors for the purpose of maximizing returns and reducing or eliminating risk, regardless of market climb or decline. It…
What is Material Nonpublic Information? Material Nonpublic Information is information that would affect the market value or trading of a security and that has not been disseminated to the general public. It is considered insider information. Information is considered to be “material” if its dissemination to the public would likely affect the market value or…
What are Marketable Securities? Marketable securities are unrestricted short-term financial instruments that are issued either for equity securities or for debt securities of a publicly listed company. The issuing company creates these instruments for the express purpose of raising funds to further finance business activities and expansion. Governments also issue debt securities of this type in the form of T-bills, used for…
What are the Most Important Fixed Income Terms? Welcome to CFI’s guide to the most important fixed income terms. For a complete understanding of bonds and fixed-income securities, check out our Fixed Income Fundamentals course. Annuity: An annuity is a series of payments in equal time periods, guaranteed for a fixed number of years. Annuity…
What is a Subsidiary? A subsidiary (sub) is a business entity or corporation that is fully owned or partially controlled by another company, termed as the parent, or holding, company. Ownership is determined by the percentage of shares held by the parent company, and that ownership stake must be at least 51%. What are the…
What is Simple Interest? Simple interest is a calculation of interest that doesn’t take into account the effect of compounding. In many cases, interest compounds with each designated period of a loan, but in the case of simple interest, it does not. The calculation of simple interest is equal to the principal amount multiplied by…
