Explore
All Investment Analysis Content
-
Accounts Receivable Turnover
Accounts Receivable TurnoverWhat is Accounts Receivable Turnover? The Accounts Receivable Turnover is a working capital ratio used to estimate the number of times per year a company collects cash payments owed from customers who...
-
Active vs. Passive Investing
Active vs. Passive InvestingWhat is Active vs. Passive Investing? Active vs Passive Investing is a long-standing debate within the investment community, with the central question being whether the returns from active management...
-
Activist Investor
Activist InvestorWhat is an Activist Investor? An Activist Investor seeks to be the catalyst of a turnaround of an underperforming publicly-traded company to profit from share price appreciation.
-
Alpha (α)
Alpha (α)What is Alpha? Alpha (α) in finance is a measure of the excess return on an investment or portfolio above the benchmark return.
-
Alternative Investments
Alternative InvestmentsWhat are Alternative Investments? Alternative Investments are comprised of non-traditional asset classes, such as private equity, hedge funds, real estate, and commodities. Traditional investments ref...
-
Assets Under Management (AUM)
Assets Under Management (AUM)What is Assets Under Management? Assets Under Management (AUM) refers to the market value of the capital contributed to a fund, from which an institutional firm invests on behalf of its clients, i.e....
-
Attrition Rate
Attrition RateWhat is Attrition Rate? The Attrition Rate measures the employee turnover within a corporation, i.e. the percentage at which employees churned over a specified period. Tracking the employee attrition...
-
Average Cost (Per Unit Cost)
Average Cost (Per Unit Cost)What is Average Cost? The Average Cost, or “per unit cost”, is an economic term that describes the approximate cost incurred to manufacture one production unit.
-
Average Fixed Cost (AFC)
Average Fixed Cost (AFC)What is Average Fixed Cost? The Average Fixed Cost (AFC) is the fixed costs incurred by a company that remain constant irrespective of output, expressed on a per-unit basis.
-
Average Order Value (AOV)
Average Order Value (AOV)What is AOV? Average Order Value (AOV) estimates the typical amount spent by a customer in each order, commonly placed on a website (i.e. e-commerce) or mobile app.
-
Average Selling Price (ASP)
Average Selling Price (ASP)What is Average Selling Price? The Average Selling Price (ASP) is a financial metric that measures the approximate amount paid by a customer to purchase a specific product.
-
Average Total Cost (ATC)
Average Total Cost (ATC)What is Average Total Cost? The Average Total Cost (ATC) is the total cost per unit of output, inclusive of both fixed costs and variable costs. Therefore, the average total cost, often abbreviated as...
-
Average Variable Cost (AVC)
Average Variable Cost (AVC)What is Average Variable Cost? The Average Variable Cost (AVC) is the variable cost per unit incurred by a business across a given period. The average variable cost is calculated by dividing a company...
-
Balance of Trade
Balance of TradeWhat is Balance of Trade? The Balance of Trade is the value of a country’s exports (“outflows”) minus the value of its imports (“inflows”). Often used interchangeably with the term “trade balance”, th...
-
Bank Efficiency Ratio
Bank Efficiency RatioWhat is the Efficiency Ratio? The Efficiency Ratio is a risk measure used to evaluate the cost-efficiency and profitability of a bank. The operating efficiency of a bank represents its ability to gene...
-
Bank Run
Bank RunWhat is a Bank Run? A Bank Run occurs when customers start to collectively withdraw their funds from banks under the belief that the bank is at risk of becoming insolvent.
-
Barriers to Entry
Barriers to EntryWhat are Barriers to Entry? Barriers to Entry deter new entrants from entering a market and protect the profits of existing incumbents. The existence of barriers to entry within a particular industry...
-
Basis Points (bps)
Basis Points (bps)What are Basis Points? Basis Points (bps) represent a unit of measurement for interest rates in finance and are equal to 1/100th of 1.0%. The term “basis points” is most often used when discussing the...
-
BCG Growth Share Matrix
BCG Growth Share MatrixWhat is BCG Growth Share Matrix? The BCG Growth Share Matrix is a framework designed for companies to better understand a market’s current and future competitive landscape, which helps determine...
-
Bid-Ask Spread
Bid-Ask SpreadWhat is the Bid-Ask Spread? The Bid-Ask Spread represents the difference between the quoted ask price and the quoted bid price of a security listed on an exchange.
-
Black Swan Event
Black Swan EventWhat is a Black Swan Event? A Black Swan Event is a metaphor describing a rare, unexpected phenomenon with a low probability of occurrence, yet has a significant impact on society as a whole.
-
Bloomberg vs. Capital IQ vs. Factset vs. Refinitiv
Bloomberg vs. Capital IQ vs. Factset vs. RefinitivBloomberg vs. Capital IQ (CapIQ) vs. Factset vs. Refinitiv Bloomberg, Capital IQ (CapIQ), Factset and Refinitiv are the leading providers of financial data, which play a critical role in a finance pro...
-
Bottom Up Forecasting
Bottom Up ForecastingWhat is Bottom Up Forecasting? Bottom Up Forecasting consists of breaking a business apart into the underlying components that ultimately drive its revenue generation, profits, and growth.
-
Buyback Yield
Buyback YieldWhat is Buyback Yield? The Buyback Yield is the ratio between the value of a company’s net stock repurchases and its market capitalization as of the beginning of a period, expressed as a percent...
-
Capital Gain
Capital GainWhat is Capital Gain? A Capital Gain occurs when the value of an investment – typically in equity (stocks) or debt instruments – rises above the initial purchase price post-sale.
-
Capital Gains Yield (CGY)
Capital Gains Yield (CGY)What is Capital Gains Yield? The Capital Gains Yield measures the percent increase or decrease in the price of a security, namely a common share.
-
Capital Intensity Ratio
Capital Intensity RatioWhat is the Capital Intensity Ratio? The Capital Intensity Ratio is a method to measure the reliance on asset purchases by a company to sustain a specified level of growth.
-
Career Path in Sales and Trading
Career Path in Sales and TradingSales and trading offer a lucrative career path, with ample and structured opportunities for internal promotion opportunities. The career progression for S&T professionals is as follows (most juni...
-
Cash Conversion Ratio (CCR)
Cash Conversion Ratio (CCR)What is Cash Conversion Ratio? The Cash Conversion Ratio (CCR) measures the efficiency at which a company is able to convert its net income into operating cash flow.
-
Cash EPS
Cash EPSWhat is Cash EPS? The Cash EPS is a non-GAAP profitability ratio that compares a company’s operating cash flow (OCF) to its diluted weighted average number of shares outstanding.
-
Chartered Financial Analyst (CFA) Guide
Chartered Financial Analyst (CFA) GuideWhat is the CFA Designation? The Chartered Financial Analyst (CFA) designation is a globally recognized credential for investment and finance professionals. In the following CFA guide, we’ll del...
-
Churn Rate
Churn RateWhat is Churn Rate? The Churn Rate measures the percentage of a SaaS company’s existing customers that have opted to cancel their subscriptions (i.e. or otherwise discontinue being a customer) during...
-
Committed Monthly Recurring Revenue (CMRR)
Committed Monthly Recurring Revenue (CMRR)What is CMRR? Committed Monthly Recurring Revenue (CMRR) is a SaaS company’s monthly recurring revenue (MRR), while taking into account new bookings and churn.
-
Commodities
CommoditiesWhat are Commodities? Commodities are basic goods used for both consumption and production but also for physical exchanges and trading derivatives contracts.
-
Compound Annual Growth Rate (CAGR)
Compound Annual Growth Rate (CAGR)What is CAGR? CAGR—or “Compound Annual Growth Rate”—is the annualized rate of growth in the value of an investment or financial metric over a stated period. Conceptually, the CAGR metric m...
-
Consumer Surplus
Consumer SurplusWhat is Consumer Surplus? A Consumer Surplus is present when the actual prices paid by consumers for goods and services are less than the maximum prices at which they would be willing to pay.
-
Corporate Bonds
Corporate BondsWhat are Corporate Bonds? Corporate Bonds are debt issuances by public and private companies to raise capital in exchange for periodic interest payments and the full repayment of principal at maturity...
-
Cost Structure
Cost StructureWhat is Cost Structure? The Cost Structure of a business model is defined as the composition of fixed costs and variable costs within the total costs incurred by a company.
-
Cost-Benefit Analysis (CBA)
Cost-Benefit Analysis (CBA)What is Cost-Benefit Analysis? Cost-Benefit Analysis refers to a capital budgeting ratio wherein the estimated costs and benefits of a project are compared to determine its economic feasibility. If th...
-
Cross-Sell Rate
Cross-Sell RateWhat is Cross-Sell Rate? The Cross-Sell Rate measures the proportion of a company’s revenue attributable to cross-selling strategies, expressed as a percentage.
-
Cross-Selling
Cross-SellingWhat is Cross-Selling? Cross-Selling is a strategy wherein a business strives to encourage existing customers to purchase adjacent products complementary to an item that the customer has already bough...
-
Customer Acquisition Cost (CAC)
Customer Acquisition Cost (CAC)What is Customer Acquisition Cost? The Customer Acquisition Cost (CAC) is a SaaS metric that measures the amount spent on average by a business to acquire a new customer.
-
Cyclical Stocks
Cyclical StocksWhat are Cyclical Stocks? Cyclical Stocks are publicly traded securities characterized by share prices that fluctuate along with the prevailing macroeconomic conditions and business cycles.
-
Day in the Life of Sales and Trading Analyst
Day in the Life of Sales and Trading AnalystA day in the life of a rates trading analyst Follow along for a typical day of a first year Rates Trading Analyst on the Interest Rate Swaps Desk in New York. Rates Trading sits within Fixed Income an...
-
Days to Cover
Days to CoverWhat is Days to Cover? Days to Cover, often used interchangeably with “short interest ratio,” is the number of days necessary for all short positions to be covered, i.e. bought back by the short-selle...
-
Deflation
DeflationWhat is Deflation? Deflation occurs when an economy’s aggregate measure of pricing, i.e. the consumer price index (CPI), experiences a sustained, long-term decline. A period of deflation consists of a...
-
Degree of Financial Leverage (DFL)
Degree of Financial Leverage (DFL)What is Degree of Financial Leverage? Degree of Financial Leverage (DFL) quantifies the sensitivity of a company’s net income (or EPS) to changes in its operating profit (EBIT) attributable to debt fi...
-
Degree of Total Leverage (DTL)
Degree of Total Leverage (DTL)What is Degree of Total Leverage? The Degree of Total Leverage (DTL) ratio estimates the sensitivity of a company’s net income to changes in the number of units sold.
-
Diseconomies of Scale
Diseconomies of ScaleWhat are Diseconomies of Scale? Diseconomies of Scale occur if the incremental per unit cost of production rises from an increase in production volume (or output).
-
Dividend Coverage Ratio
Dividend Coverage RatioWhat is Dividend Coverage Ratio? The Dividend Coverage Ratio (DCR) measures the number of times that a company can pay shareholders its announced dividend using its net income.
-
Dividend Yield
Dividend YieldWhat is Dividend Yield? The Dividend Yield is the ratio between the dividend paid per share (DPS) and the current market share price of the issuer, expressed as a percentage.
-
Dollar Cost Averaging (DCA)
Dollar Cost Averaging (DCA)What is Dollar Cost Averaging? Dollar Cost Averaging (DCA) is an investment strategy where rather than investing all the available capital at once, incremental investments are gradually made over time...
-
Dow Jones Index (DJIA)
Dow Jones Index (DJIA)What is Dow Jones? The Dow Jones Industrial Average (DJIA) is a price-weighted stock market index tracking the share price movements of 30 publicly traded, blue-chip companies.
-
Earnings Power Value (EPV)
Earnings Power Value (EPV)What is Earnings Power Value? Earnings Power Value (EPV) is a method used to estimate the intrinsic value of a stock under the implicit assumption that the current earnings and cost of capital are sus...
-
Earnings Yield
Earnings YieldWhat is Earnings Yield? The Earnings Yield is calculated by dividing the earnings per share (EPS) in the trailing twelve months by the latest closing market share price.
-
Economic Moat
Economic MoatWhat is Economic Moat? An Economic Moat is the competitive advantage belonging to a particular business that protects its profit margins from competitors in the market and other external threats.
-
Economic Value Added (EVA)
Economic Value Added (EVA)What is Economic Value Added (EVA)? The Economic Value Added (EVA) is the surplus profit generated by a project in excess of the total cost of funding the project. In simple terms, the economic value...
-
Economies of Scale
Economies of ScaleWhat are Economies of Scale? Economies of Scale occur when the production costs on a per-unit basis decline as the output increases, resulting in cost savings and higher profit margins.
-
Efficient Market Hypothesis (EMH)
Efficient Market Hypothesis (EMH)What is the Efficient Market Hypothesis? The Efficient Market Hypothesis (EMH) theory – introduced by economist Eugene Fama – states that the prevailing asset prices in the market fully reflect all av...
-
EPS Forecast
EPS ForecastHow to Forecast Earnings Per Share (EPS) One of the last steps in building a 3-statement financial model is forecasting shares outstanding. The share count matters because it tells you how much of a c...
-
EPS Growth
EPS GrowthWhat is EPS Growth? EPS Growth measures the rate at which a company’s earnings per share (EPS) is increasing or decreasing, expressed as a percentage.
-
Equity Research Report
Equity Research ReportWhat is Equity Research Report? Sell-side equity research analysts primarily communicate their investment thesis and perspective on the outlook of a publicly-traded company through the publication of...
-
Equity Research vs. Sales and Trading
Equity Research vs. Sales and TradingWhat does Sales & Trading Do? Institutional investors such as pension funds, mutual funds, university endowments, as well as hedge funds use investment banks in order to trade securities. Investme...
-
Equity Value Per Share
Equity Value Per ShareWhat is Equity Value Per Share? The Equity Value Per Share is the market value of a company’s common equity expressed on a per share basis. Often used interchangeably with the term “market value...
-
ESG Investing
ESG InvestingWhat is ESG Investing? ESG Investing is the commitment by retail and institutional investors to incorporate environmental, social, and governance metrics into their decision-making processes.
-
Event-Driven Investing
Event-Driven InvestingWhat is Event-Driven Investing? Event-Driven Investing is a strategy wherein investors capitalize on pricing inefficiencies caused by corporate events such as mergers, acquisitions, spin-offs, and ban...
-
Exchange Traded Funds (ETFs)
Exchange Traded Funds (ETFs)What are ETFs? Exchange Traded Funds (ETFs) are publicly-traded securities that tracks a specific index, sector, commodity (e.g. gold), or an underlying collection of assets.
-
Expected Return
Expected ReturnWhat is Expected Return? The Expected Return measures the anticipated return on an investment or portfolio of securities, expressed in the form of a percentage.
-
Expense Ratio
Expense RatioWhat is Expense Ratio? The Expense Ratio represents the total operating costs incurred by a mutual fund as a percentage of its average value of net assets managed. In practice, the expense ratio matte...
-
FCF Margin
FCF MarginWhat is FCF Margin? The FCF Margin is a company’s operating cash flow minus its capital expenditures in a specified period, expressed as a percentage of revenue.
-
Fisher Equation
Fisher EquationWhat is the Fisher Equation? The Fisher Equation illustrates the relationship between nominal interest rates and real interest rates, where the difference is attributable to inflation.
-
Fixed Cost
Fixed CostWhat are Fixed Costs? Fixed Costs are independent of output and its dollar amount remains constant irrespective of a company’s production volume.
-
Fixed Income Securities
Fixed Income SecuritiesWhat is Fixed Income? Fixed Income describes securities where investors provide capital to corporations or a government for a set duration in return for regular interest payments and the original prin...
-
Free Market Economy
Free Market EconomyWhat is Free Market Economy? In a Free Market Economy, the production of goods and services is determined by consumer demand rather than controlled by a central government. Since supply and demand in...
-
Full Time Equivalent (FTE)
Full Time Equivalent (FTE)What is Full Time Equivalent? The Full Time Equivalent (FTE) represents a unit of measurement standardized to equal the number of hours worked by the typical full-time employee. In practice, FTE is me...
-
Futures Contract
Futures ContractWhat is a Futures Contract? A Futures Contract is a financial derivative in which there is an obligation between counterparties to exchange an underlying asset at a pre-determined price on an agreed-u...
-
GDP Deflator
GDP DeflatorWhat is GDP Deflator? The GDP Deflator tracks the changes in the prices of all the goods and services produced within a country’s economy in order to measure its true economic state. The GDP deflator,...
-
Gold Investment
Gold InvestmentWhat is a Gold Investment? A Gold Investment in a portfolio is perceived by many investors as a hedge against inflation and recessions, hence its reputation as a “safe haven” asset class.
-
Green Bonds
Green BondsWhat are Green Bonds? Green Bonds are a financing arrangement in which the issuer commits to using the proceeds to fund projects promoting the environment and sustainability.
-
Gross Merchandise Value (GMV)
Gross Merchandise Value (GMV)What is GMV? GMV, or “Gross Merchandise Value”, refers to the total order value of all merchandise sold across a given time period. In particular, GMV is a critical KPI most often tracked...
-
Gross Revenue Retention (GRR)
Gross Revenue Retention (GRR)What is Gross Revenue Retention? The Gross Revenue Retention (GRR) is the percentage of a SaaS company’s recurring revenue retained from existing customers, inclusive of the effects of downgrade...
-
Growth Rate
Growth RateWhat is Growth Rate? The Growth Rate reflects the percentage change in a metric, such as the population or sales, across a specified time frame.
-
Hedge Fund Course
Hedge Fund CourseWhat is the Top Hedge Fund Course? Our Hedge Fund Course is an intensive, career-oriented training program designed to prepare aspiring buy-side analysts and investment professionals. In partnership w...
-
Hedge Fund Primer
Hedge Fund PrimerWhat is Hedge Fund? A Hedge Fund is an alternative investment vehicle that uses specialized hedging strategies across various asset classes to generate positive returns uncorrelated with the broader m...
-
Hedge Fund Shorting Process
Hedge Fund Shorting ProcessHow Do Hedge Funds Short Stocks? In a recent article, I posted an investment banking pitchbook to give you a sense of what these bad boys actually look like. If you were thoroughly under-impressed by...
-
Hedge Fund vs. Mutual Fund
Hedge Fund vs. Mutual FundHedge Fund vs. Mutual Fund: What is the Difference? The key differences between hedge funds and mutual funds primarily lie in their respective risk profiles, target demographics, and fee structures.
-
Holding Period Return (HPR)
Holding Period Return (HPR)What is Holding Period Return? The Holding Period Return (HPR) measures the total return earned on an investment, inclusive of the capital gain and income (e.g. dividends, interest income).
-
Horizontal Analysis
Horizontal AnalysisWhat is Horizontal Analysis? Horizontal Analysis measures a company’s operating performance by comparing its reported financial statements, i.e. the income statement and balance sheet, to the financia...
-
How to Break Into Sales and Trading
How to Break Into Sales and TradingI’ve had a lot of people ask me how to break into sales and trading. I’ve mentored both current students and mid-office professionals looking to move onto a job on the trading floor. I’ve interviewed...
-
Hyperinflation
HyperinflationWhat is Hyperinflation? Hyperinflation occurs in a country’s economy when the prices of goods and services rise in excess of 50% per month.
-
Implied Dividend Growth Rate
Implied Dividend Growth RateWhat is the Implied Dividend Growth Rate? The Implied Dividend Growth Rate can be derived from rearranging the dividend discount model formula.
-
Incremental Margin
Incremental MarginWhat is Incremental Margin? The Incremental Margin measures the change in a profit metric per unit change in revenue, so conceptually it reflects the profit margin of growth.
-
Incremental Net Working Capital (NWC)
Incremental Net Working Capital (NWC)What is Incremental Net Working Capital? The Incremental Net Working Capital (NWC) measures the percent change in a company’s operating current assets and current liabilities relative to its change in...
-
Information Ratio
Information RatioWhat is Information Ratio? The Information Ratio quantifies the excess portfolio returns over the returns of a benchmark, relative to the volatility of the excess returns. In short, the information ra...
-
Inorganic Growth
Inorganic GrowthWhat is Inorganic Growth? Inorganic Growth is achieved by pursuing activities related to mergers and acquisitions (M&A) instead of implementing improvements to existing operations.
-
InsurTech Guide
InsurTech GuideWhat is InsurTech? InsurTech describes the emergence of innovative technologies built to improve the cost-efficiency and effectiveness of the traditional insurance sector.
-
Interest Rate Risk
Interest Rate RiskWhat is Interest Rate Risk? Interest Rate Risk represents the inherent potential for monetary losses incurred by a lender from fluctuations in the market interest rate.
-
Inverted Yield Curve
Inverted Yield CurveHow to Interpret an Inverted Yield Curve On December 3, 2018, parts of the yield curve inverted for the first time in a decade. Specifically, the difference (“yield spread”) between 3-year and 5-year...
-
Invested Capital (IC)
Invested Capital (IC)What is Invested Capital? Invested Capital (IC) refers to the financing raised by a company from debt and equity capital providers to fund its operations, such as its working capital requirements and...
-
Jensen’s Measure
Jensen’s MeasureWhat is Jensen’s Measure? Jensen’s Measure quantifies the excess returns obtained by a portfolio of investments above the returns implied by the capital asset pricing model (CAPM).
-
Laissez Faire
Laissez FaireWhat is Laissez Faire? Laissez Faire is an economic policy based on the premise that the government should not intervene in the marketplace. The laissez faire doctrine advocates for minimal meddling b...
-
Largest Institutional Investors
Largest Institutional InvestorsLargest Institutional Investors by AUM Institutional investors represent a part of the financial markets known as the "buy side." (Learn more: Sell Side vs. Buy Side). Below is a list of the largest i...
-
Long-Short Equity (L/S)
Long-Short Equity (L/S)What is Long-Short Equity? Long-Short Equity (L/S) is an investing strategy comprised of taking long positions on publicly-traded equities anticipated to rise in share price, paired with short-selling...
-
Maintenance Margin
Maintenance MarginWhat is Maintenance Margin? The Maintenance Margin, or variation margin, is the minimum amount of equity that must be maintained in a margin account before a margin call is issued due to the account v...
-
Margin Call Price
Margin Call PriceWhat is the Margin Call Price? The Margin Call Price refers to the minimum equity percentage expected to be held in a margin account before resulting in a margin call.
-
Margin of Safety
Margin of SafetyWhat is Margin of Safety? The Margin of Safety (MOS) is the percent difference between the current stock price and the implied fair value per share. The margin of safety, one of the core principles in...
-
Marginal Cost
Marginal CostWhat is Marginal Cost? The Marginal Cost quantifies the incremental cost incurred from the production of each additional unit of a good or service.
-
Marginal Profit
Marginal ProfitWhat is Marginal Profit? Marginal Profit represents the incremental change in a company’s profit from the sale of one additional unit.
-
Marginal Revenue
Marginal RevenueWhat is Marginal Revenue? Marginal Revenue represents the incremental change – either positive or negative – in a company’s revenue from selling one more unit. The production and sale of an additional...
-
Market Neutral Strategy
Market Neutral StrategyWhat is Market Neutral Strategy? The Market Neutral Strategy constructs a portfolio to profit from mispriced securities by pairing long and short positions in issuers in the same or an adjacent sector...
-
Market Penetration
Market PenetrationWhat is Market Penetration? The Market Penetration Rate measures the percentage of total customers in a company’s target market acquired by the company as of a specific date.
-
Market Share
Market ShareWhat is Market Share? The Market Share is the percentage of revenue attributable to a particular company relative to the total revenue generated within a given industry. Simply put, the market share o...
-
Market Value
Market ValueWhat is Market Value? The Market Value of a company’s common equity is a function of the most recent price paid by investors in the open markets to purchase a share and the total number of diluted sha...
-
Market Volatility
Market VolatilityWhat is Market Volatility? Market Volatility describes the magnitude and frequency of pricing fluctuations in the stock market and is most often used by investors to gauge risk by helping to predict f...
-
Markup Percentage
Markup PercentageWhat is the Markup Percentage? The Markup Percentage represents the excess average selling price (ASP) per unit over the cost per unit. In order for a good or service to be profitable, companies must...
-
Markup Price
Markup PriceWhat is a Markup? The Markup Price is the difference between a product’s average selling price (ASP) and the corresponding unit cost, i.e. the cost of production on a per-unit basis.
-
Maximum Drawdown (MDD)
Maximum Drawdown (MDD)What is Maximum Drawdown? The Maximum Drawdown (MDD) quantifies the maximum downside risk of an investment portfolio across a given time period.
-
Monopolistic Competition
Monopolistic CompetitionWhat is Monopolistic Competition Monopolistic Competition is defined as an environment wherein the market participants sell differentiated products, yet serve the same end market. In economics, monopo...
-
Months to Recover CAC
Months to Recover CACWhat is Months to Recover CAC? The Months to Recover CAC is the time it requires a SaaS business to recoup the initial capital spent to acquire a customer on average.
-
Mutual Funds
Mutual FundsWhat is a Mutual Fund? Mutual Funds are a pooled collection of investments in stocks, bonds, and other financial instruments that are overseen by a team of fund managers and research analysts.
-
Natural Monopoly
Natural MonopolyWhat is a Natural Monopoly? A Natural Monopoly occurs when a single company can produce and offer to sell a product or service at a lower cost than its competitors can, resulting in practically no com...
-
NAV Per Share (NAVPS)
NAV Per Share (NAVPS)What is NAV Per Share? NAV Per Share (NAVPS) represents the total value of a mutual fund, ETF, or REIT, expressed on a per-share basis.
-
Net Revenue Retention (NRR)
Net Revenue Retention (NRR)What is NRR? The Net Revenue Retention (NRR) is the percentage of revenue retained from existing customers at the start of a period after accounting for expansion revenue and churn.
-
Network Effects
Network EffectsWhat are Network Effects? Network Effects refer to the incremental benefits gained from new users joining the platform, which results in the product becoming more valuable for all users.
-
Nominal Interest Rate
Nominal Interest RateWhat is Nominal Interest Rate? The Nominal Interest Rate reflects the stated cost of borrowing before adjusting for the effects of unexpected inflation.
-
Oligopoly
OligopolyWhat is Oligopoly? Oligopoly is an economic term that describes a market structure wherein only a select few market participants compete with each other. The competitive dynamics within an oligopoly a...
-
Open Market Operations (OMO)
Open Market Operations (OMO)What are Open Market Operations? Open Market Operations refer to a central bank selling or purchasing securities in the open market in an effort to influence the money supply.
-
Operating Ratio
Operating RatioWhat is Operating Ratio? The Operating Ratio measures how cost-efficient a company is by comparing its operating costs (i.e. COGS and SG&A) to its sales.
-
Organic Growth
Organic GrowthWhat is Organic Growth? Organic Growth is growth that is achieved from a company’s internal initiatives to improve its business model, resulting in improvements to a company’s revenue grow...
-
Original Equipment Manufacturer (OEM)
Original Equipment Manufacturer (OEM)What is OEM? An Original Equipment Manufacturer (OEM) produces equipment, parts, and components on behalf of another company. The purchaser of an OEM’s product is called a value-added reseller (VAR) b...
-
Porter’s 5 Forces Model
Porter’s 5 Forces ModelWhat is Porter’s 5 Forces Model? Porter’s 5 Forces Model provides a structured framework for industry analysis and the competitive dynamics impacting an industry’s profitability.
-
Preferred Shares vs. Common Shares
Preferred Shares vs. Common SharesWhat is Preferred Shares vs. Common Shares? Preferred Shares and Common Shares represent two distinct equity issuance classifications that represent partial ownership in companies. Otherwise referred...
-
Pricing Power
Pricing PowerWhat is Pricing Power? Pricing Power refers to the ability of a business to raise its prices without incurring a meaningful loss in market demand. In fact, the incremental profits from the decision to...
-
Quantitative Easing (QE)
Quantitative Easing (QE)What is Quantitative Easing (QE)? Quantitative Easing (QE) refers to a form of monetary policy where the central bank attempts to encourage economic growth by purchasing long-term securities to increa...
-
Quota Attainment
Quota AttainmentWhat is Quota Attainment? The Quota Attainment is the percentage of the sales target a sales representative or sales team achieved over the course of a given period. The sales and marketing (S&M)...
-
Random Walk Theory
Random Walk TheoryWhat is the Random Walk Theory? The Random Walk Theory assumes price movements in the stock market are not predictable since they are determined by unexpected events with no correlation to the past.
-
Real Rate of Return
Real Rate of ReturnWhat is Real Rate of Return? The Real Rate of Return (%) measures the percentage return earned on an investment after adjusting for the inflation rate and taxation, unlike the nominal rate.
-
Repurchase Agreement (Repo)
Repurchase Agreement (Repo)What is a Repo? A Repurchase Agreement, or “repo”, involves the sale of a Treasury security and subsequent repurchase shortly thereafter for a marginally higher price.
-
Reserve Requirements
Reserve RequirementsWhat are Reserve Requirements? Reserve Requirements are defined as the percentage of a depository institution’s cash that the central bank mandates it has on hand, rather than being lent out or invest...
-
Return on Assets (ROA)
Return on Assets (ROA)What is Return on Assets? The Return on Assets (ROA) is a profitability ratio that reflects the efficiency at which a company utilizes its total assets to generate more net earnings, expressed as a pe...
-
Return on Capital Employed (ROCE)
Return on Capital Employed (ROCE)What is ROCE? The Return on Capital Employed (ROCE) measures the efficiency of a company at deploying capital to generate sustainable, long-term profits. In practice, the ROCE is a method to ensure th...
-
Return on Equity (ROE)
Return on Equity (ROE)What is Return on Equity? Return on Equity (ROE) measures the net profits generated by a company based on each dollar of equity investment contributed by shareholders. Typically expressed in percentag...
-
Return on Incremental Invested Capital (ROIIC)
Return on Incremental Invested Capital (ROIIC)What is ROIIC? The Return on Incremental Invested Capital (ROIIC) measures capital allocation efficiency by comparing the change in a company’s NOPAT relative to its invested capital. Often used...
-
Return on Invested Capital (ROIC)
Return on Invested Capital (ROIC)What is ROIC? The Return on Invested Capital (ROIC) measures the percentage return of profitability earned by a company using the capital contributed by equity and debt providers. In practice, ROIC is...
-
Return on Investment (ROI)
Return on Investment (ROI)What is ROI? The Return on Investment (ROI) is a profitability ratio that compares the net profits received at exit to the original cost of an investment, expressed as a percentage.
-
Return on Tangible Equity (ROTE)
Return on Tangible Equity (ROTE)What is Return on Tangible Equity? Return on Tangible Equity (ROTE) measures the efficiency with which a company operates and utilize its tangible assets to generate long-term profits. By comparing th...
-
Revenue Per Employee
Revenue Per EmployeeWhat is Revenue Per Employee? The Revenue Per Employee measures the sales efficiency of a company by comparing its revenue to its number of employees.
-
Reverse DCF Model
Reverse DCF ModelWhat is a Reverse DCF Model? The Reverse DCF Model attempts to reverse-engineer the current share price of a company to determine the assumptions implied by the market.
-
Reverse Stock Split
Reverse Stock SplitWhat is a Reverse Stock Split? A Reverse Stock Split is performed by companies attempting to increase their share price by reducing the number of shares in circulation.
-
Roles and Asset Classes in Sales and Trading
Roles and Asset Classes in Sales and TradingWhat are the Key Roles in Sales and Trading? Although we call it Sales & Trading, there are more Front Office Sales & Trading jobs that aren’t technically sales or trading. Front Office...
-
S&P 500 Index (SPX)
S&P 500 Index (SPX)What is S&P 500? The S&P 500 is a market-cap weighted stock index constructed to track the share price performance of the top 500 large-cap U.S. equities. Established in January 1993, the S...
-
Sales & Trading Salary Guide
Sales & Trading Salary GuideSales and Trading Compensation A sales and trading has a similar comp structure to investment banking, comprised of a base and a bonus. For a sales & trading "Analyst 1" (an analyst's first full y...
-
Sales and Trading Guide
Sales and Trading GuideHow Does Sales and Trading Work? As you can see from the image below, Sales & Trading, along with equity research, are on the sell side (the investment banking side) and facilitate trades between...
-
Same-Store Sales
Same-Store SalesWhat is Same Store Sales? The Same Store Sales metric compares the performance of an individual store in a given period relative to the same period in the prior year.
-
Secondary Market
Secondary MarketWhat is Secondary Market? The Secondary Market is a platform where investors actively purchase and sell existing securities (post-issuance), such as stocks and bonds, amongst themselves rather than wi...
-
Securities Industry Essentials (SIE) Exam
Securities Industry Essentials (SIE) ExamIntroduction to the Securities Industry Essentials (SIE) Beginning October 1, 2018, FINRA will overhaul the format of its regulatory exams: A new general knowledge exam called the Securities Industry...
-
Security Market Line (SML)
Security Market Line (SML)What is Security Market Line? The Security Market Line (SML) is a graphical representation of the capital asset pricing model (CAPM), which reflects the linear relationship between a security’s...
-
Sell-Side vs. Buy-Side Equity Research
Sell-Side vs. Buy-Side Equity ResearchBuy-Side vs. Sell-Side Equity Research: What is the Difference? Buy-Side and Sell-Side Equity Research Analysts are investment research professionals, where the primary difference comes down to the cl...
-
Series 7 Exam
Series 7 ExamOverview of the Series 7 Exam [caption id="attachment_21946" align="alignright" width="450"] Ben Affleck wants to know if anyone here has passed the Series 7 exam?[/caption] The Series 7 exam, also ca...
-
Sharpe Ratio
Sharpe RatioWhat is Sharpe Ratio? The Sharpe Ratio is the risk-adjusted return of a portfolio measured by dividing the excess return by the standard deviation of the portfolio.
-
Shiller PE (CAPE Ratio)
Shiller PE (CAPE Ratio)What is Shiller PE Ratio? The Shiller PE, or “CAPE Ratio” is a variation of the price to earnings ratio adjusted to remove the effects of cyclicality, i.e. the fluctuations in the earnings...
-
Short Interest
Short InterestWhat is Short Interest? Short Interest is the percentage of a particular company’s total stock float that has been shorted, i.e. short-positions that have not yet been covered or closed.
-
Short Selling
Short SellingWhat is Short Selling? Short Selling is the process by which an investor sells borrowed securities from a brokerage in the open markets, expecting to repurchase the borrowed securities at a lower pric...
-
Short Squeeze
Short SqueezeWhat is a Short Squeeze? A Short Squeeze occurs when securities with a significant short interest rise sharply in value, which further accelerates the upward price movement from short-sellers closing...
-
Sortino Ratio
Sortino RatioWhat is Sortino Ratio? The Sortino Ratio is a variation of the Sharpe ratio used to measure the risk-adjusted return on a portfolio that compares performance relative to the downside deviation, rather...
-
Stagflation
StagflationWhat is Stagflation? Stagflation describes periods of rising unemployment rates alongside slowing economic growth, i.e. negative gross domestic product (GDP). An economic state of stagflation is chara...
-
Stock Buyback
Stock BuybackWhat is Stock Buyback? A Stock Buyback occurs when a company decides to repurchase its own previously issued shares either directly in the open markets or via a tender offer.
-
Stock Split
Stock SplitWhat is a Stock Split? A Stock Split occurs when a publicly-traded company’s board of directors decides to separate each outstanding share into multiple shares.
-
Sunk Cost Fallacy
Sunk Cost FallacyWhat is Sunk Cost Fallacy? The Sunk Cost Fallacy is a cognitive bias in behavioral finance where investors have a tendency to continue a strategy because of their reluctance to forego the capital, tim...
-
Switching Costs
Switching CostsWhat are Switching Costs? Switching Costs describe the burden incurred by customers from switching providers, which can reduce churn and act as a barrier to new entrants.
-
SWOT Analysis
SWOT AnalysisWhat is SWOT Analysis? The SWOT Analysis is a framework for evaluating a company’s competitive positioning, typically completed for purposes of internal strategic planning.
-
TAM Sizing
TAM SizingWhat is TAM Sizing? TAM Sizing is a top-down forecasting approach used by companies to determine their product’s total market demand and revenue potential. The process of sizing a particular mar...
-
Tiger Cubs
Tiger CubsWhat are the Tiger Cubs? Tiger Cubs describe the hedge funds that were founded by the former employees of Julian Robertson’s firm, Tiger Management. Before the firm was shut down, Tiger Management was...
-
Top Down Forecasting
Top Down ForecastingWhat is Top Down Forecasting? The Top Down Forecasting approach refers to estimating future sales by applying an implied market share percentage to a total market size estimate.
-
Top Hedge Funds
Top Hedge FundsWhat are the Top Hedge Funds? The Top Hedge Funds are compiled in the following list, where the rankings are based on their assets under management (AUM).
-
Total Payment Volume (TPV)
Total Payment Volume (TPV)What is TPV? Total Payment Volume (TPV) reflects the monetary value of the transactions facilitated by a particular payment processor on a gross basis.
-
Trade Deficit
Trade DeficitWhat is a Trade Deficit? A Trade Deficit describes a country with a negative trade balance, wherein the total value of the country’s net imports exceeds the total value of its exports to other countri...
-
Trade Execution
Trade ExecutionS&T: An Insider's View I stumbled into a Wall Street Trading floor having no idea what a Wall Street Trader actually does. I struggled to find any good information online or in books. I signed up...
-
Trade Surplus
Trade SurplusWhat is a Trade Surplus? A Trade Surplus means a country’s trade balance is positive, i.e. the value of the country’s net exports is greater than the value of its imports from other countries.
-
Trailing Twelve Months (TTM)
Trailing Twelve Months (TTM)What is TTM? The Trailing Twelve Months (TTM) portrays a company’s financial performance across the past four quarters, or last twelve months. In the context of financial modeling, TTM financial...
-
Treasury Bond (T-Bond)
Treasury Bond (T-Bond)What is a Treasury Bond? A Treasury Bond, or “T-Bond”, is a fixed income security issued and backed by the full faith and credit of the U.S. government.
-
Treasury Inflation-Protected Securities (TIPS)
Treasury Inflation-Protected Securities (TIPS)What are Treasury Inflation-Protected Securities (TIPS)? Treasury Inflation-Protected Securities (TIPS) are designed to be indexed to changes in inflation as a form of risk protection from the adverse...
-
Treasury STRIPS
Treasury STRIPSWhat are Treasury STRIPS? Treasury STRIPS are zero-coupon bonds sold for less than par and pay no interest because the cash flow component was carved out to be separately traded in the secondary marke...
-
Treynor Ratio
Treynor RatioWhat is the Treynor Ratio? The Treynor Ratio is a measure of a portfolio’s excess return per unit of systematic risk, or the market volatility of the portfolio. Often referred to as the “reward-to-vol...
-
Trial Conversion Rate
Trial Conversion RateWhat is Trial Conversion Rate? The Trial Conversion Rate is a SaaS KPI that measures the percentage of free users that convert to paid users over a predefined period. In practice, the trial conversion...
-
Unsystematic Risk
Unsystematic RiskWhat is Unsystematic Risk? Unsystematic Risk, or “idiosyncratic risk”, refers to the risk inherent to a particular company or industry, rather than from the broader economy and financial markets.
-
Upsell Rate
Upsell RateWhat is Upsell Rate? The Upsell Rate is the proportion of upsell revenue generated relative to a company’s total revenue, expressed as a percentage.
-
Upselling
UpsellingWhat is Upselling? Upselling refers to the tactics utilized by businesses to generate more incremental revenue from their existing customer base.
-
Utilization Rate
Utilization RateWhat is Utilization Rate? The Utilization Rate measures the efficiency at which a company can utilize its employees to maximize productivity and output.
-
Variable Cost
Variable CostWhat are Variable Costs? Variable Costs are output-dependent and subject to fluctuations based on the production output, so there is a direct linkage between variable costs and production volume.
-
Warren Buffett on EBITDA
Warren Buffett on EBITDAWhy Does Warren Buffett Dislike EBITDA? While EBITDA is among the most widely used metrics in corporate finance, it receives widespread criticism, with Warren Buffett being one of the most outspoken p...
-
Year over Year (YoY)
Year over Year (YoY)What is YoY? The Year over Year (YoY) growth is the percentage change in an annualized metric over two comparable periods, most often the current and prior period. By comparing a company’s current ann...
-
Zynga IPO Valuation
Zynga IPO Valuation[caption id="attachment_6246" align="alignright" width="150"] Zynga founder Mark Pincus will only get a $9b valuation. Solution? Claw back employees' stock options![/caption] Zynga IPO Valuation: Exam...