What is a Private vs Public Company? The main difference between a private vs public company is that the shares of a public company are traded on a stock exchange, while a private company’s shares are not. There are several more important differences to understand, which this article will outline below. Differences Between a Private…
What is the Gross Margin Ratio? The Gross Margin Ratio, also known as the gross profit margin ratio, is a profitability ratio that compares the gross margin of a company to its revenue. It shows how much profit a company makes after paying off its Cost of Goods Sold (COGS). The ratio indicates the percentage…
What is Junior Tranche Debt? A junior tranche is an unsecured debt that ranks lower in repayment priority than other debts in the event of default. It is also referred to as subordinated debt. When a company goes into liquidation or bankruptcy, the creditors receive payments in order of priority, with senior debt receiving payments…
What are Key Performance Indicators (KPIs)? Key Performance Indicators (KPIs) are metrics used to periodically track and evaluate the performance of a business or organization toward the achievement of specific goals. They are also used to gauge the overall performance of the company against other comparable companies within the industry. Source: CFI’s KPI Dashboard Course….
What is Alpha? Alpha is a measure of the performance of an investment as compared to a suitable benchmark index, such as the S&P 500. An alpha of one (the baseline value is zero) shows that the return on the investment during a specified time frame outperformed the overall market average by 1%. A negative…
What is Dividend Yield? The Dividend Yield is a financial ratio that measures the annual value of dividends received relative to the market value per share of a security. In other words, the dividend yield formula calculates the percentage of a company’s market price of a share that is paid to shareholders in the form…
What is Recapitalization? Recapitalization is a type of corporate restructuring that aims to change a company’s capital structure. Usually, companies perform recapitalization to make their capital structure more stable or optimal. Recapitalization essentially involves exchanging one type of financing for another – debt for equity, or equity for debt. One example is when a company issues…
What is Corporate Structure? Corporate structure refers to the organization of different departments or business units within a company. Depending on a company’s goals and the industry in which it operates, corporate structure can differ significantly between companies. Each of the departments usually performs a specialized function while constantly collaborating with each other to achieve…
What is an Interest Rate? An interest rate refers to the amount charged by a lender to a borrower for any form of debt given, generally expressed as a percentage of the principal. The asset borrowed can be in the form of cash, large assets such as a vehicle or a building, or just consumer goods. In the…
