Fundamentals

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  1. What is a good interest coverage ratio?

    Learn the importance of the interest coverage ratio, one of the primary debt ratios analysts use to evaluate a company's ...
  2. What is a bad interest coverage ratio?

    Understand how interest coverage ratio is calculated and what it signifies, and learn what market analysts consider to be ...
  3. What is liquidity risk?

    Learn how to distinguish between the two broad types of financial liquidity risk: funding liquidity risk and market liquidity ...
  4. What is a good gearing ratio?

    Understand the meaning of the gearing ratio, how it is calculated, the definition of high and low gearing, and how they reflect ...
  5. What is considered to be a bad gearing ratio?

    Understand the basics of gearing, including the net gearing ratio, what constitutes a bad gearing ratio and how this figure ...
  6. What does the gearing ratio say about risk?

    Find out why lenders and investors pay close attention to a firm's gearing ratios, and why both too much and too little borrowing ...
  7. What is the difference between a capital gearing ratio and a net gearing ratio?

    Understand the definition of gearing in the finance industry, the difference between net gearing and capital gearing ratios ...
  8. What is the difference between the gearing ratio and the debt-to-equity ratio?

    Dive deeper into gearing ratios: what are they, how are they used and why the debt to equity ratio is one of the most popular ...
  9. What is the difference between interest coverage ratio and DSCR?

    Understand the basics of the interest coverage ratio and the debt-service coverage ratio, including calculations and how ...
  10. What is the difference between interest coverage ratio and TIE?

    Read about the times interest earned, also known as the interest coverage ratio. Find out why this is an important ratio ...
  11. What is accrual accounting used for in finance?

    Read about the accrual method of accounting, its uses and rules, and why it is considered so important for investors, lenders ...
  12. What is the difference between accrual accounting and cash accounting?

    Understand the differences between the two basic methods of accounting commonly used by businesses: cash accounting and accrual ...
  13. When are expenses and revenues counted in accrual accounting?

    Take an in-depth look at the treatment of revenues and expenses within the accrual method of accounting and learn why many ...
  14. When does a business report gross margins?

    Learn how gross margins are calculated and when publicly traded companies release these figures. Explore consensus street ...
  15. What is the difference between a P&L statement and a balance sheet?

    Take a deeper look at the differences between the profit and loss statement and the balance sheet, two of the most important ...
  16. What is a P&L statement used for?

    Discover how the profit and loss statement is used by investors, accountants and business managers to assess the health and ...
  17. What are essential steps to financial due diligence?

    Explore different areas of financial due diligence. Learn the steps of due diligence that may help ensure selected investments ...
  18. Accruals represent liabilities and non-cash-based assets.

    What does Accrual Mean?

    In accrual-based accounting, transactions are recorded on the books as they occur, even if payment has not yet been received ...
  19. Earnings Quality, the Facebook Example

    When judging Facebook's quality of earnings it is important to understand the various sources of revenue and trends in those ...
  20. Not All Online Trading Brokers Are Created Equal

    The online trading broker market is becoming more and more competitive. Small differences between them can add up to big ...
  21. Novice Trading Strategies

    How to use Investopedia’s Chart Advisor section to build efficient trading strategies.
  22. How do I build a trading strategy after spotting a breakaway gap pattern?

    Capitalize on the irrational exuberance investors create, forming a breakaway gap. Learn the best strategy for trading a ...
  23. What's the difference between capital expenditures (CAPEX) and operational expenditures ...

    Learn to distinguish between capital expenditures (CAPEX) and operational expenditures (OPEX) as listed on a company's income ...
  24. What's the difference between capital expenditures (CAPEX) and net working capital?

    Learn more about capital expenditures (CAPEX) and net working capital, two distinct but related measurements of a company's ...
  25. Why is it important to understand the Circular Flow Of Income when making investment ...

    Find out why investors should pay attention to a firm's circular flow of income model to measure its efficiency and evaluate ...
  26. What are the most common leverage ratios for evaluating a company?

    Learn more about some of the most common leverage ratios used by traders to determine whether a company is using debt in ...
  27. Is your idea of a budget simply spending till your checking account is nearly empty? Or worse, till your credit limit is exhausted?

    What's Your Idea Of Budgeting?

    Is your idea of a budget simply spending till your checking account is nearly empty? Or worse, till your credit limit is ...
  28. What's more important, cash flow or profits?

    Learn about the different effects that cash flow and profit have on a business so you can decide which aspect to focus on.
  29. Which leverage ratios are most useful for analyzing manufacturing companies?

    See which leverage ratios investors and creditors are likely to use when analyzing the debt burdens for manufacturing companies.
  30. What are some examples of how cash flows can be manipulated or distorted?

    Read about some of the most common accounting techniques that can be used to manipulate the operating cash flow on a company's ...
  31. What is the difference between cash flow and free cash flow?

    Learn about the main differences between cash flow and free cash flow. In addition to the differences, learn how to calculate ...
  32. What's the difference between levered and unlevered free cash flow?

    The difference between levered and unlevered free cash flow can determine if a business has the means or financial ability ...
  33. Is free cash flow the same as net free cash flow?

    Know the difference between your net cash flow and free cash flow when pitching your company to any of your potential stockholders.
  34. How is it possible for a company to have a negative enterprise value?

    Learn about enterprise value and how value investors use it to find good companies with undervalued stocks. Negative enterprise ...
  35. What does a mutual fund's beta coefficient measure?

    Evaluate the risk associated with a particular mutual fund by determining its beta coefficient, which illustrates the fund's ...
  36. What's the difference between enterprise value and market capitalization?

    Learn the difference between two commonly utilized valuation tools: market capitalization and enterprise value, and see how ...
  37. What's the difference between free cash flow and operating cash flow?

    Learn the difference between free cash flow and operating cash flow. Explore how analysts use earnings and cash flow when ...
  38. The return on Assets (ROA) and return on equity (ROE) are often used metrics to measure the returns generated by a company.

    How Do Tech Companies Measure ROA And ROE?

    The return on Assets (ROA) and return on equity (ROE) are often used metrics to measure the returns generated by a company.
  39. What metrics should I evaluate when looking for high-yielding dividend stocks?

    Evaluate high-yield dividend stocks to determine if they are a good investment to produce steady income. Learn what questions ...
  40. What's the difference between retained earnings and revenue?

    See why retained earnings and revenue are both considered important measurements of a company's financial performance, and ...
  41. SIC Vs. NAIC -An Introduction To Industry Classification Codes

    Standard Industrial Classification (SIC) Codes and the more recent NAICS codes are crucial to classifying data to measure ...
  42. Investing In New York City REITs

    So you want a bite of The Big Apple? These REITs focus on New York City real estate. Here's what you need to know.
  43. How Sallie Mae Affects Student Loans

    Sallie Mae, which has financed many a college education, originally was a federally chartered government sponsored enterprise. ...
  44. The shorter the payback period, the better the investment is judged to be.

    Payback Period

    Payback period is the time it takes for an investment to generate an amount of income or cash equal to the cost of the investment. ...
  45. What's the difference between profit margin and operating margin?

    Find out the differences between a company's gross profit margin, net profit margin and operating margin, and what each metric ...
  46. How do I calculate earnings per share with simple capital and complex capital structure?

    Learn the difference between simple and complex capital structures and how the structure affects a company's calculations ...
  47. What are the differences between dilutive securities and antidilutive securities?

    Learn how investors and accountants apply the terms "dilutive" and "antidilutive" to securities or the exercise of security ...
  48. How much should my profit margins be?

    Understand some of the major factors you need to consider before you set a target profit margin on the merchandise for your ...
  49. What are some examples of factors that will affect my profit margin?

    Dive into profit margin, and discover some of the many factors that can influence the profit margin for your company in a ...
  50. What are the main income statement ratios?

    Learn how to calculate and interpret some of the most common and insightful financial ratios, like earnings per share, from ...
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