Voodoo Economics
What is Voodoo Economics? Voodoo economics is the term George H.W. Bush used to describe U.S. President Ronald Reagan’s economic policies before becoming his vice president. Bush invented the term, which was deemed derogatory, in 1980. The former vice president was of the opinion that Reagan’s supply-side policies were not only going to fall short…
Vulture Capitalist
What is a Vulture Capitalist? A vulture capitalist is a type of investor that scavenges off distressed companies for profit, like a vulture scavenges off the dead bodies of animals. (Vulture capitalists typically receive criticism because their tactics involve the targeting of individuals and/or companies who are already experiencing financial difficulties!) Hedge funds and private…
Inventory Turnover
What is Inventory Turnover? Inventory turnover, or the inventory turnover ratio, is the number of times a business sells and replaces its stock of goods during a given period. It considers the cost of goods sold, relative to its average inventory for a year or for any set period of time. A high inventory turnover generally means…
Divestiture
What is a Divestiture? A divestiture (or divestment) is the disposal of company’s assets or a business unit through a sale, exchange, closure, or bankruptcy. A partial or full disposal can happen, depending on the reason why management opted to sell or liquidate its business’ resources. Examples of divestitures include selling intellectual property rights, corporate…
Corporation
What is a Corporation? A corporation is a legal entity created by individuals, stockholders, or shareholders, with the purpose of operating for profit. Corporations are allowed to enter into contracts, sue and be sued, own assets, remit federal and state taxes, and borrow money from financial institutions. The creation of a corporation involves a legal…
Amalgamation
What is Amalgamation? In corporate finance, an amalgamation is the combination of two or more companies into a larger single company. In accounting, an amalgamation, or consolidation, refers to the combination of financial statements. For example, a group of companies reports their financials on a consolidated basis, which includes the individual statements of several smaller…
Stock
What is a Stock? When a person owns stock in a company, the individual is called a shareholder and is eligible to claim part of the company’s residual assets and earnings (should the company ever have to dissolve). A shareholder may also be referred to as a stockholder. The terms “stock,” “shares,” and “equity” are…
Sharpe Ratio
What is the Sharpe Ratio? Named after American economist, William Sharpe, the Sharpe Ratio (or Sharpe Index or Modified Sharpe Ratio) is commonly used to gauge the performance of an investment by adjusting for its risk. The higher the ratio, the greater the investment return relative to the amount of risk taken, and thus, the…
ROAS (Return on Ad Spend)
What is ROAS? ROAS stands for “Return on Ad Spend,” a very popular financial metric in the world of digital marketing in particular, and a similar alternative metric to ROI, or “Return on Investment.” ROAS is commonly used in eCommerce businesses to evaluate the effectiveness of a marketing campaign. It should be noted that having a…
