by TheBusinessProfessor | Feb 23, 2025 | Business Finance, Personal Finance, and Valuation Principles
What is the Price-Earnings Ratio?The price-earnings ratio (P/E ratio) determines the value of the company by calculating the its current share price comparative to its per-share earnings. The price-earnings ratio is also often known as the price multiple or the...
by TheBusinessProfessor | Feb 23, 2025 | Business Finance, Personal Finance, and Valuation Principles
What is an Internal Rate of Return?Internal rate of return (IRR) refers to a metric utilized in capital budgeting to estimate how profitable potential investments are. Internal rate of return refers to a discount rate which makes all cash flow’s net present...
by TheBusinessProfessor | Feb 23, 2025 | Business Finance, Personal Finance, and Valuation Principles
What is Net Present Value?Net present value (NPV) refers to the variance between cash flows over a period of time. It measures the difference between the present value of cash inflows and cash flows for a given time. NPV accounts for the value of time, value of money,...
by TheBusinessProfessor | Feb 23, 2025 | Business Finance, Personal Finance, and Valuation Principles
What is an Earnings Basis?The term Earnings Basis can have vastly differing denotations, depending on whether it is used in the context of an employee or an organization. In the context of an individual employee, earnings basis refers to the basis of an employees...
by TheBusinessProfessor | Feb 23, 2025 | Business Finance, Personal Finance, and Valuation Principles
What is Cost of Capital?Cost of capital refers to the entire cost or expenses required to finance a major capital project, this include cost of debt and cost of equity. In this case, the meaning of cost of capital is dependent on the type of financing used, whether...
by TheBusinessProfessor | Feb 23, 2025 | Business Finance, Personal Finance, and Valuation Principles
What is the Cost of Equity?Cost of Equity has two meanings: Company – A company’s expected return on a prospective project or business opportunity. Investors – The cost of equity is the rate of return demanded by investors. A company expects a return...
