What is Timing of Synergies? When a company is looking to enter into a merger & acquisition deal, the timing of synergies is of extreme importance. It is because M&A deals are essentially time-sensitive because of the volatile nature of financial markets. The market constantly goes through periods of expansion and recession, characterized by economic…
What is P/FFO? P/FFO, or Price to Funds From Operations, can be described as a reliable and modern way of determining the value of a Real Estate Investment Trust (REIT). The P/FFO metric is calculated by adding amortization and depreciation to the net income and then deducting the gains on the sale of properties. Unlike…
Income vs Revenue vs Earnings Income, revenue, and earnings are probably the three most widely used concepts in accounting and finance. All the terms denote measures of a company’s profitability. Although they are defined differently, they are frequently confused with one another. Income (net income) is the amount of money a company retains after subtracting all…
What is Earnings Before Tax (EBT) vs Pretax Income? Actually, there is no difference between earnings before tax (EBT) vs pretax income. Both terms denote the same concept and can be used interchangeably. Essentially, EBT or pretax income is a measure of the company’s profitability. EBT indicates the amount of money that a company retains…
What are Intersegment Sales? Intersegment sales refer to revenue generated by means of a transaction between segments within the same business. It is generally the case with large conglomerates that engage in several lines of business. Such companies manage segments that have interconnect operations either vertically or horizontally. Companies are required to disclose all intersegment…
What is Cash and Carry Arbitrage? Cash and carry arbitrage is a financial arbitrage strategy that involves exploiting the mispricing between an underlying asset and the financial derivative corresponding to it. Using the cash and carry arbitrage strategy, a trader aims to use market pricing discrepancies between the underlying(s) and the derivative to their advantage…
What is Market Share? Market share refers to the portion or percentage of a market earned by a company or an organization. In other words, a company’s market share is its total sales in relation to the overall industry sales of the industry in which it operates. Say, for example, the purchasing activity of consumers…
What is the EV/Gross Profit Ratio? The EV/Gross Profit Ratio is a profitability financial ratio that estimates the enterprise value of a company to its gross profit. It demonstrates how many dollars of enterprise value are generated for every dollar of gross profit earned. Generally, the lower the ratio, the lower is the company’s net…
What is After Tax Operating Income (ATOI)? After tax operating income (ATOI) is a company’s operating income after all taxes are paid. The ATOI is not recognized by the GAAP as it excludes the after-tax benefits from accounting changes. Since it is not a part of GAAP, what is included and excluded in ATOI changes?…
What is Debtor vs. Creditor? The key difference between a debtor vs. creditor is that both concepts denote two counterparties in a lending arrangement. The distinction also results in a difference in financial reporting. On the company’s balance sheet, the company’s debtors are recorded as assets while the company’s creditors are recorded as liabilities. Note…
