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WACC is the rate of money a company must pay to finance its operations

Net Book Value (NBV) is an accounting figure that represents an asset's value on a company's balance sheet.

Shares outstanding are the total shares of a company currently held by shareholders.

A Fund of Funds (FoF) is a financial basket that contains a variety of investment funds.

DuPont analysis includes multiple component ratios that combine to form the company’s return on equity (ROE) figure.

Free enterprise is an economic system where private businesses operate in competition, largely free of state control.

A divestiture is the process by which a company disposes of a business unit, division, or assets.

NOPAT stands for Net Operating Profit After Taxes.

Straight line depreciation is a depreciation method that stays constant over the useful life of a fixed asset.

A tender offer is an invitation to purchase a substantial number of shares of a company.

The Margin of Safety (MOS) represents the buffer zone between a company's break-even point and its actual or projected revenue.

Contingent liabilities are a type of liability that may be owed in the future as the result of a potential event.

Current Liabilities refer to a company's short-term financial obligations.

Accrued expenses are unpaid costs at the end of an accounting period which are recorded as liabilities.

Debentures are debt instruments used by organisations to raise funds.

Corporate acquisitions where one company takes control of another without mutual agreement.

The debt to asset ratio shows what percentage of the company’s assets are funded by debt, as opposed to equity.

The current ratio compares a company’s current assets to its current liabilities.

Learn what a multi-step income statement is and why it’s useful.

The cost of producing one additional unit of a good or service.

Enterprise Value (EV) is a way of measuring what a company is worth, and is often used by would-be acquirers.

EBIT (Earnings Before Interest and Taxes) is an important financial measure.

Liquidity ratios measure a company’s ability to meet short-term obligations.

Accumulated depreciation is the sum of all depreciation on a fixed asset. It is recorded as a contra-asset on the balance sheet.

The par value of a security is the value assigned to it when it is first legally created, and is separate from the market value at which that security is bought and sold.

The inventory turnover ratio measures the amount of times inventory is sold and replaced by a company during a specific period of time.

The cash conversion cycle measures the number of days it takes a company to convert its cash investments in inventory into cash from product sales.

Operating leverage measures a company’s ability to increase its operating income by increasing its sales volume.

Mark to Market (MTM) is an accounting method used to measure the current value of assets or liabilities that change over time

The double declining balance method is an accelerated depreciation method that multiplies twice the straight-line depreciation method.

The Treasury Stock Method is a technique used to calculate Diluted Earnings per Share (EPS).

Current assets are short-term assets that a company expects to convert to cash, use in the course of business, or sell off within a one year time period.

The acid-test ratio is a metric to gauge how easily a company can meet its short-term obligations.

A basis point is a unit of measurement in finance for small percentages. One basis point is equivalent to 0.01% or 1/100 of a percent.

Operating profit represents a company’s profit after all expenses except for interest expense, taxes, and one-off costs have been deducted.

The interest coverage ratio is used to determine a company’s ability to meet its interest expense obligations with its operating income.

Interest expense is the cost of borrowing money from a lender. Interest expense appears on the income statement after operating income.

The quick ratio measures a company’s ability to pay for its current liabilities with its most liquid, short-term assets.

The contribution margin ratio is a company’s (revenue - variable costs) / revenue.

Learn what a prepaid expense is, and how it’s recorded on a company’s financial statements.

Accounts Receivable is an asset on a company’s balance sheet, and it represents money customers owe you.

CapEx (Capital Expenditure) is the money used by a company to purchase, maintain, or improve its fixed assets.

Learn how to calculate the perpetuity formula.

Gross profit is the profit after subtracting the direct costs associated with a sale.

Learn how to calculate a company’s net income.

Learn how additional paid-in capital is used to track equity fundraising contributions in a company.

Learn how the debt service coverage ratio is used to measure the credit profile of a company.

Learn the definition of cost of sales and how it is used to capture key production expenses.

Learn what prorated is and how it can be applied to everyday calculations.

Learn what residual value is and how to calculate it.

Learn how a trust fund works and how it can be useful for asset inheritance.

Learn how to find and calculate retained earnings using a company’s financial statements.

Learn how to calculate MOIC and how it's used to measure the investment performance of private equity funds.

Learn how YoY (Year-over-Year) is used in finance with examples on Microsoft Excel.

Understand what a golden parachute is and the controversy behind its implementation.

Use our free Levered Beta Calculator and read up on our breakdown of levered beta featuring definitions, formulas, calculation steps, and real examples.

A complete guide to understanding the precedent transactions analysis.

Learn how to make a professional financial dashboard from scratch.

Learn what Operating Cash Flow is and why investors use it to better understand a company's financial health.

Learn how to calculate the beta of a stock.

A guide on how to approach one of Wall Street’s most ubiquitous assignments: the stock pitch.

Learn the difference between unlevered and levered beta and how to convert between the two types of betas.

Learn how to calculate the cost of equity using the capital asset pricing model (CAPM).

How to use and understand a WACC Calculator.

Learn the key differences between a company’s balance sheet and income statement.

Learn what an income statement is and how you can go about putting together a company income statement from top to bottom.

Build a cash flow statement using a company income statement and balance sheet.