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
Operating profit is the profit generated from the core business of a company before accounting for interest and taxes.
Current assets are all of the assets a company uses to fund its daily operations. These are the assets the company could convert into cash within a year in the normal course of business.
Floating stock is the number of a company’s shares that are available for the public to buy and sell.
A customer information file is a collection of data about a bank or credit union patron.
The Solvency Ratio is one of many ratios used to measure a company's ability to pay its debts. Generally, the higher the ratio the better.
Earnings before interest and taxes, or EBIT, takes a company’s revenue, or earnings, and subtracts its cost of goods sold and operating expenses.
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