Cost of Equity
The cost of equity is the rate of return an investor requires from a stock before exploring other opportunities.
Companies have to reward shareholders for the risk that other investments will pay a higher return. Typically, the cost of equity is higher when the overall stock market is strong, or when the company is seen as volatile.
The rate of return that investors seek may come from two possible sources. In some cases, they receive dividends, which provide an immediate reward for their ownership. Or the stock could experience appreciation, enabling them to profit when they sell shares.
Cost of Equity = [Dividend Payout ÷ Share Price] + Rate of Appreciation
Otherwise known as Earnings Before Interest, Taxes, Depreciation and Amortization. Learn more about this indicator of a company's financial performance.
A liability is a debt. It is an obligation that arises during the course of business and represents a third-party claim on the company's assets. A liability can arise in a number of different ways. It can be a type of borrowing or a promise to pay later.
Float is money in the banking system that is briefly counted twice due to delays in processing checks.
Not too sure what an ex-dividend date is? Find out here and learn how and when you can take advantage of a stock's dividend.
Intangible assets represent potential revenue. Take an intangible asset like brand recognition: There is value in people remembering your company and then wanting to buy its products.
Free On Board is a legal term referencing the passing of title and liability between buyers and sellers of goods.
comments powered by Disqus