What is a Liquidity Event? A liquidity event is a process by which an investor liquidates their investment position in a private company and exchanges it for cash. The main purpose of a liquidity event is the transfer of an illiquid asset (an investment in a private company) into the most liquid asset – cash….
What Does Negotiable Mean? The term “negotiable” is commonly referred to as the price of a good or security, or any other term or provision in a contract or an agreement, that is not firmly settled between the parties and that can be adjusted. The negotiable price of a good or the negotiable term of…
What is a Venture Capital Fund? A venture capital fund is a type of investment fund that invests in early-stage startup companies that offer a high return potential but also come with a high degree of risk. The fund is managed by a venture capital firm, and the investors are usually institutions or high net…
What is an Earnings Guidance? An earnings guidance is the information provided by the management of a publicly traded company regarding its expected future results, including estimates of revenues, expenses, margins, and earnings. In addition, the company’s management sets up its future direction by defining its short-term and long-term goals. The earnings guidance is important…
What is Quantitative Analysis? Quantitative analysis is the process of collecting and evaluating measurable and verifiable data such as revenues, market share, and wages in order to understand the behavior and performance of a business. In the past, business owners and company directors relied heavily on their experience and instinct when making decisions. However, with…
What is Negative Carry? Negative carry is a carry trade with a negative yield, meaning the cost of holding (carrying) the investment exceeds the yield. How It Works In some rare circumstances, it is prudent to purchase a low-yielding asset by using (borrowing) a high-yielding asset. Before we proceed, let us try to understand the primary…
What is the Notice to Reader Report? The notice to reader report is a compilation of financial statements using financial data provided by the management. The report is prepared by an external chartered accountant, and it does not provide assurance on the correctness of the financial statements. The notice means that the prepared financial statements…
What are Financial Statement Footnotes? Financial statement footnotes are used as additional information by individuals reading financial statements. Otherwise known as explanatory notes or notes to the financial statements, the footnotes help add supplementary information to help further explain the related information in the financial statements without clouding the primary information that the statements are…
What is the Direct Capitalization Method? The direct capitalization method is obtained by taking the income recorded over time and dividing it by the respective capitalization rates taken over the same period. The cap rate is obtained by dividing the net operating income by the value of the assets. The direct capitalization method is not…
What are Industrial REITs? Industrial REITs are companies that own and manage real estate properties that are used for manufacturing, production, storage, and distribution of goods. The structure under which industrial REITs operate requires them to pay at least 90% of their net revenues as dividends to shareholders. Interested investors can become shareholders in industrial…
