Finance

Stock buyback is a transaction whereby a company repurchase its own share from market at a fixed price. This facility allow a company to go back to the shareholders and make an offer to purchase shares from them. Generally we have two popular ways through which a company can return cash to its shareholders- Declaration of dividend orthrough buy back of shares. Both … [Read more...] about What is Stock Buyback or Share Repurchase – is it good for investors?

One of the most popular ways to categories stocks is based on its market capitalization as it defines the size of the company. Even mutual fund schemes are divided based on in which type of company they invest. Before knowing the difference between small cap, midcap and large cap, you must understand how market capitalization of a stock is calculated. Market capitalization … [Read more...] about Difference between Small cap, Midcap and Large cap stocks

Every stock has two prices: the intrinsic value and the market value. Value investing is an investment strategy in which investors buy stocks that is trading at a price lower than the estimated intrinsic value. Intrinsic value is known as the company's true worth. Whereas, market value is the price which other people are willing to pay for the asset at any given moment. You … [Read more...] about What is value investing in the stock market and how it works

Margin of safety in investing is first introduced by Benjamin Graham and then followed by many value investors including Warren Buffet. As per margin of safety principle, value investor should purchase stocks when their market price is lower than their estimated intrinsic value. The difference between estimated intrinsic value of a stock and its current market price is known as … [Read more...] about What is margin of safety in investing – Explained with examples

A company can be classified as private or publicly listed based on whether it's stocks can be traded in financial markets or not. Organizations whose shares are traded in the financial markets (stock exchanges) are known as publicly listed companies. Organizations whose shares can't be traded in the financial market is referred to as a private or closely held … [Read more...] about Private company versus publicly listed company – what is the difference

It’s important to carefully research fundamentals of every company in which you are planning to invest or invested to know its true value. In this article we will be discussing how an investor can sense when a stock is overvalued or undervalued by using Price to earnings or P/E ratio. Before we start, let us understand the meaning of overvalued or undervalued. What is … [Read more...] about How to sense when stock is overvalued or undervalued by using P/E ratio

Horizontal analysis of financial statements is a technique used to evaluate trends and growth pattern of financial performance over time by comparing historical data such as line items and financial ratios over a number of accounting period. It's also referred to as trend analysis or time series analysis of financial statements. You can use horizontal analysis to … [Read more...] about How horizontal analysis of financial statements can help you in investing

Special journal or register is used to segregate duties for better internal control in accounting department and to keep special journal entries separate from general ledger. Segregation of duties in accounting department is based on the function they perform or the responsibility they undertake. Here are the list of some of the special journal maintained in the accounting … [Read more...] about What is special journal in financial accounting system

Intangible assets are those identifiable assets which have no physical substance and are not a financial instrument. This means you can not touch it. Intangible assets are disclosed under the head non-current assets on the company's balance sheet as these are long-term resources of the organization. The opposite of intangible asset is tangible or physical assets such as … [Read more...] about Understanding intangible assets on the balance sheet

Vertical analysis is a technique used to express line items of financial statements in relation to a single item or base. For vertical analysis of income statement, revenue is considered as a base and for balance sheet, total assets is considered as a base. It's also referred as vertical common-size analysis of financial statements or common-size vertical analysis of … [Read more...] about What is common-size vertical analysis of financial statements