What is Credit Report Analysis? Credit report analysis involves evaluating the information contained in a credit report, such as the personal details of a customer, their credit summary, any inquiries made, foreclosures and repossessions, and public records on bankruptcies. A credit report provides a credit record of an individual or corporate entity. It helps the…
What are Credit Analyst Skills? An individual needs to possess key credit analyst skills in order to be effective in the role. A credit analyst is required to assess a loan application to determine the creditworthiness of a client and make recommendations on whether or not to lend. For a credit analyst to perform his/her…
What are Commercial Properties REITs? Commercial properties REITs are real estate investment trusts that specialize in commercial properties. The REITs operate like mutual funds, where investors contribute funds to a central pool to purchase commercial properties. It gives them the required exposure to commercial real estate investments without having to buy properties on their own….
What is the Herfindahl-Hirschman Index (HHI)? The Herfindahl-Hirschman Index is an index that measures the market concentration of an industry. A highly concentrated industry is one where only a few players in the industry hold a large percentage of the market share, leading to a near-monopolistic situation. A low degree of concentration means that the industry is…
What is the Cash Flow to Debt Ratio? The cash flow to debt ratio is a coverage ratio that compares the cash flow that a business generates to its total debt. The cash flow most commonly used to calculate the ratio is the cash flow from operations, although using unlevered free cash flow is also a viable…
What are Leverage Effect Measures? Leverage effect measures aim to quantify how much business risk a given company is currently experiencing. Business risk refers to the revenue variance that a business can expect to see, and how sensitive net income is to changes in revenues. Leverage effect measures aim to show how the business’ fixed…
What is Return on Common Equity? The Return on Common Equity (ROCE) ratio refers to the return that common equity investors receive on their investment. ROCE is different from Return on Equity (ROE) in that it isolates the return that the company sees on its common equity, rather than measuring the total returns that the…
What is the Defensive Interval Ratio? The defensive interval ratio (DIR) is a financial liquidity ratio that indicates how many days a company can operate without needing to tap into capital sources other than its current assets. It is also known as the basic defense interval ratio (BDIR) or the defensive interval period ratio (DIPR)….
What is a Futures Contract? A futures contract is an agreement to buy or sell an underlying asset at a later date for a predetermined price. It’s also known as a derivative because future contracts derive their value from an underlying asset. Investors may purchase the right to buy or sell the underlying asset at…
What is the Pretax Margin Ratio? The Pretax Margin Ratio, also knows at the Earnings Before Tax (EBT) ratio, is an operating profitability ratio used by market analysts and investors. This ratio is useful in analyzing the standalone profitability of a company’s operations, as it excludes tax expense. The pretax margin ratio is also useful…
