The balance sheet is the document where assets, liabilities, and equity of a particular company or a person are recorded. It’s a crucial financial statement wildly used in accounting, investing, analytics, and other areas. In this article we’ll explain what a balance sheet is, cover its essential components, and answer the most common questions.
Assets, liabilities, and equity are three core accounting concepts. It’s impossible to evaluate a company properly without a thorough knowledge of them. The word “equity” has many meanings but, in this article, we focus on equity in the general accounting sense, although we briefly cover other kinds of equity too.
The stock market have been very generous towards investors during the recent years and the S&P 500 index is at its highest levels now. Unfortunately, good past returns do not guarantee good future returns and some market analysts, economists, and investors have started to worry about the yield curve movements.
The main purpose of any investment is to generate more money than the amount invested, the time it takes to do so is called the payback period (PBP) in capital budgeting. Payback period is wildly used by investors and entrepreneurs when they consider to open a new enterprise, invest in an existing business, or when they try to pick the best opportunity among two or more possible options.
All of the major countries’ central banks hold a significant portion of their reserves in foreign currencies. Why do they purchase them and why the U.S. dollar is the most popular reserve currency? In this article, we’ll explain what the reserve currencies are, what purpose do they serve and why the world’s central banks hold them.
Alpha (α) and beta (β) are two crucial coefficients that are used for measurement of success of a particular portfolio. Beta represents the volatility of a particular asset (or the whole portfolio) versus the volatility of the benchmark. In this article, we’ll explain what beta is and give a few simple examples to demonstrate how it can be used.
More than 20 years ago, in 1997, Robert Kiyosaki and Sharon Lechter released their book “Rich Dad Poor Dad” which became an immediate success. This book is about personal finance, entrepreneurship, business, investing and economics and it has become some kind of a bible for a lot of people.
Alpha (α) coefficient in investing is used for measurement of the success of a particular portfolio. Along with beta, the alpha coefficient helps portfolio managers to determine how certain picked assets performed against the market average. In this article, we’ll explain how to use alpha and why is it important for investors.
It’s usually justified to be skeptical about financial forecasting, yet most portfolio managers have certain expectations regarding the future rate of return on the investments they make. How does one figure out an expected return of a financial portfolio? In this article, we’ll explain a method that is commonly used to calculate the expected return.
It’s believed that investing is something that only the rich and old people should be interested in but an early start can bring many financial benefits. We’ll explain why you should start investing early and what benefits it can bring when you get older.
Traders use many strategies to minimize their risks and maximize their returns, but one of them is particularly common and useful: it’s the 1% risk rule. In this article, we’ll break down this simple yet effective risk management strategy and show how a portfolio manager can use it in his daily financial operations.
When you open your first bank account an adviser would often propose you to get checking (otherwise known as current) and savings accounts. The first one, without any interest for your day-to-day transactions and the second one with a very small interest.
Recently some traditional economists were confused when they saw that more countries joined “the negative interest rates club”, so here is my opinion on this bizarre macroeconomic trend. We’ll try to explain why such a policy has occurred and why it can be a dangerous sign for the global economy.
Before a company makes its way to the public market, it has to go through a complex and expensive procedure of Initial Public Offering (IPO). In this article, we’ll look at how an IPO usually goes, why is it important, and why many mid-size companies are trying hard to achieve this significant milestone.
Liquidity is a core concept in finance, capital management, and business and that’s why this term is often used in media by portfolio managers, market analysts, and various economists. Although this term is very popular, it’s not that easy for an outsider to understand what it means.
A lot of people have a misconception about the amount of capital required to start investing and they think that only the rich people can be investors and traders. Actually you can create a new real investment portfolio with a relatively small sum of money.
Investing seems like an inherently risky affair for many people but it’s not true at all, you can actually choose what level of risk you’re comfortable with. Why would you choose a higher risk? There can be only one good reason: it should give you a higher return on investment.