The expected return (also known as expected gain) is the profit or loss that an investor anticipates on an investment that has known historical rates of return (RoR). It is calculated by multiplying potential outcomes by the chances of them occurring and then totaling these results.Continue reading What is Expected Return? How to calculate it
Tag Archives: Terms
What is Return on Investment (ROI)? How to calculate it
Return on Investment (ROI) is a performance measure used to evaluate the efficiency or profitability of an investment relative to the cost of the investment in percentage. It can be used to compare the efficiency of a number of different investments by directly measuring the amount of return on a particular investment, relative to the investment’s cost.Continue reading What is Return on Investment (ROI)? How to calculate it
What is Rate of Return (RoR)? How to calculate RoR
A rate of return (RoR) is the net gain or loss of an investment over a specified time period, expressed as a percentage of the investment’s initial cost.Continue reading What is Rate of Return (RoR)? How to calculate RoR
What is stock / investment Beta (β) coefficient? How to calculate Beta
Beta (β), meaning in stocks and investment, also known as risk coefficent, is a measure of a stock’s volatility in relation to the overall market and can be used to measure a stock’s level of risk in the stock market.Continue reading What is stock / investment Beta (β) coefficient? How to calculate Beta
What is Enterprise Value (EV)?
Enterprise value (EV), a.k.a total enterprise value (TEV) or firm value (FV), is a metric to reflect the market value of a business and is often used as a more comprehensive alternative to EMC (equity market capitalization). It is a sum of claims by all claimants: creditors (secured and unsecured) and shareholders (preferred and common). Enterprise value is one of the fundamental metrics used in business valuation, financial analysis, accounting, portfolio analysis, and risk analysis.
Enterprise Value (EV) is a measure of a company’s total value, including both its debt and equity. It represents the theoretical takeover price for a company, including the purchase price of all its outstanding stock and debt. This measure is used to evaluate a company’s overall value and compare it to other companies within the same industry.
EV is calculated as the sum of a company’s market capitalization, debt, minority interests, and preferred shares, minus its cash and cash equivalents. Market capitalization is the total value of a company’s outstanding shares of stock, while debt represents the company’s outstanding liabilities. Minority interests refer to the portion of the company owned by outside investors, while preferred shares represent a type of security that has priority over common stock in terms of dividends and liquidation.
EV is useful in evaluating companies because it takes into account both debt and equity, providing a more comprehensive picture of the company’s overall value. For example, if a company has a high market capitalization but a large amount of debt, its EV would reflect this and may be lower than a company with a lower market capitalization but less debt.
In addition, EV can be used to compare companies of different sizes and structures, as it adjusts for factors such as debt levels, cash holdings, and minority interests. This makes it a useful tool for investors and analysts who are evaluating companies for investment purposes.
In conclusion, Enterprise Value is a comprehensive measure of a company’s overall value that takes into account both its debt and equity, and provides a more accurate picture of the company’s financial position than market capitalization alone.
What is EBITDA?
EBITDA stands for Earning Before Interest, Taxes, Depreciations and Amortizations is one of the most important measures of a firm’s profitability. It is calculated as Net Income + Interest + Income Taxes + Depreciations + Amortizations. Or, EBITDA = EBIT + Depreciations + Amortizations.Continue reading What is EBITDA?
What is EBIT?
EBIT stands for Earning Before Interest and Taxes. EBIT (along with EBITDA) is one of the most important metrics to measure a firm’s profitability that includes incomes and expenses except interest expenses and income tax enspenses. In other words, EBIT = Net Income + Interest + Income Taxes.Continue reading What is EBIT?
What is NPV (Net Present Value)? How to calculate NPV
Net present value (abbr. NPV) is the difference between the present value of cash inflows and the present value of cash outflows over a period of time.Continue reading What is NPV (Net Present Value)? How to calculate NPV