Business Life Cycle
What is the Business Life Cycle? The business life cycle is the progression of a business in phases over time and is most commonly divided into five stages: launch, growth, shake-out, maturity, and decline. The cycle is shown on a graph with the horizontal axis as time and the vertical axis as dollars or various…
English Auction
What is an English Auction? An English Auction, also referred to as an open cry ascending auction, starts by an auctioneer announcing the suggested opening bid or reserve price for the item on sale. The buyers with interest in the item start placing bids on the item on sale, with the auctioneer accepting higher bids…
Capital Allocation Line (CAL) and Optimal Portfolio
Capital Allocation Line (CAL) and Optimal Portfolio The Capital Allocation Line (CAL) is a line that graphically depicts the risk-and-reward profile of assets, and can be used to find the optimal portfolio. The process to construct the CAL for a collection of portfolios is described below. Portfolio Expected Return and Variance For simplicity, we will…
EBITDA Margin
What is EBITDA Margin? EBITDA margin is a profitability ratio that measures how much in earnings a company is generating before interest, taxes, depreciation, and amortization, as a percentage of revenue. EBITDA Margin = EBITDA / Revenue. The earnings are calculated by taking sales revenue and deducting operating expenses, such as the cost of goods…
EOQ
What is EOQ? EOQ stands for Economic Order Quantity. It is a measurement used in the field of Operations, Logistics, and Supply Management. In essence, EOQ is a tool used to determine the volume and frequency of orders required to satisfy a given level of demand while minimizing the cost per order. The Importance of…
CAGR
What is CAGR? CAGR stands for the Compound Annual Growth Rate. It is the measure of an investment’s annual growth rate over time, with the effect of compounding taken into account. It is often used to measure and compare the past performance of investments or to project their expected future returns. The CAGR formula is…
Total Return Swap
What is a Total Return Swap (TRS)? A Total Return Swap is a contract between two parties who exchange the return from a financial asset between them. In this agreement, one party makes payments based on a set rate while the other party makes payments based on the total return of an underlying asset. The…
Auction
What is an Auction? An auction is a system of buying and selling goods or services by offering them for bidding—allowing people to bid and selling to the highest bidder. The bidders compete against each other, with each subsequent bid being higher than the previous bid. Once an item is placed for sale, the auctioneer…
Privately Held Company
What is a Privately Held Company? A Privately Held Company is a company that is wholly owned by individuals or corporations and does not offer equity interests in the company to investors in the form of stock shares traded on a public stock exchange. A company in the “private sector” refers to non-government-owned businesses, and…
