What is the Temporal Method? The temporal method is a currency exchange method used to convert the currency that a foreign subsidiary ordinarily does business in into the currency used by its parent company. The parent company’s commonly used currency is referred to as the subsidiary’s “functional currency.” It may also be referred to as…
What is Shadow Inventory? Shadow inventory is a term used to describe properties that are typically real estate owned (REO), which means they are in foreclosure, have been foreclosed on, and are being held by banks to be released back into the market at a later date. The “shadow” part of the term is used…
What is EBIAT? EBIAT, or Earnings Before Interest After Taxes, is a financial metric that measures a company’s profitability and operating efficiency. The calculation of EBIAT removes the tax benefits gained from debt financing. EBIAT gives a true financial picture of the company, eliminating all elements that can potentially boost or reduce its financial strength….
What are International Bonds? International bonds are bonds issued by a country or company that is not domestic for the investor. The international bond market is quickly expanding as companies continue to look for the cheapest way to borrow money. By issuing debt on an international scale, a company can reach more investors. It also…
What is the CAMELS Rating System? The CAMELS Rating System was developed in the United States as a supervisory rating system to assess a bank’s overall condition. CAMELS is an acronym that represents the six factors that are considered for the rating. Unlike other regulatory ratios or ratings, the CAMELS rating is not released to…
What is Netback? Netback is a calculation used to assess companies, specifically in the oil and gas industry. This benchmark considers the revenue generated from the sale of oil and gas, and nets it against specific costs required to bring the product to market. Often, netback is shown as a per-barrel measurement. It essentially shows how…
What are Fixed Income Risks? Fixed income risks occur based on the volatility of the bond market environment. Risks impact the market value of the security when it is sold, cash flow from the security while it is held, and additional income made by reinvesting cash flows. By understanding the risks involved, investors can be…
What are Corporate Bonds? Corporate bonds are issued by corporations and usually mature within 1 to 30 years. The bonds usually offer a higher yield than government bonds but carry more risk. Corporate bonds can be categorized into groups, depending on the market sector the company operates in. They can also be differentiated based on…
What is Entry Multiple? An entry multiple, commonly used in leveraged buyouts, refers to the price paid for a company as a function of a financial metric. The entry multiple is crucial for private equity firms to know, as it helps them determine the purchase price of a company relative to a financial metric. It…
What is a Recourse Loan (Debt)? A recourse loan – alternatively known as recourse debt – is a type of loan that makes the borrower 100% liable for any outstanding balance. The loans require collateral (as they are secured loans). With an asset on the table to act as collateral, the lender may then repossess…
