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Investment is the dedication of an asset to attain an increase in value over a period of time. Investment requires a sacrifice of some present asset, such as time, money, or effort.
In finance, valuation is the process of determining the present value (PV) of an asset. In a business context, it is often the hypothetical price that a third party would pay for a given asset. Valuations can be done on assets or on liabilities. Valuations are needed for many reasons such as investment analysis, capital budgeting, merger and acquisition transactions, financial reporting, taxable events to determine the proper tax liability.
In finance, a growth stock is a stock of a company that generates substantial and sustainable positive cash flow and whose revenues and earnings are expected to increase at a faster rate than the average company within the same industry. A growth company typically has some sort of competitive advantage that allows it to fend off competitors. Growth stocks usually pay smaller dividends, as the companies typically reinvest most retained earnings in capital-intensive projects.
A pre-money valuation is a term widely used in the private equity and venture capital industries. It refers to the valuation of a company or asset prior to an investment or financing. If an investment adds cash to a company, the company will have a valuation after the investment that is equal to the pre-money valuation plus the cash amount. That is, the pre-money valuation refers to the company's valuation before the investment. It is used by equity investors in the primary market, such as venture capitalists, private equity investors, corporate investors and angel investors. They may use it to determine how much equity they should be issued in return for their investment in the company. This is calculated on a fully diluted basis. For example, all warrants and options issued are taken into account.
In economics and accounting, the cost of capital is the cost of a company's funds, or from an investor's point of view is "the required rate of return on a portfolio company's existing securities". It is used to evaluate new projects of a company. It is the minimum return that investors expect for providing capital to the company, thus setting a benchmark that a new project has to meet.
A financial analyst is a professional, undertaking financial analysis for external or internal clients as a core feature of the job. The role may specifically be titled securities analyst, research analyst, equity analyst, investment analyst, or ratings analyst. The job title is a broad one: in banking, and industry more generally, various other analyst-roles cover financial management and (credit) risk management, as opposed to focusing on investments and valuation; these are also discussed in this article.
Capital structure in corporate finance is the mix of various forms of external funds, known as capital, used to finance a business. It consists of shareholders' equity, debt, and preferred stock, and is detailed in the company's balance sheet. The larger the debt component is in relation to the other sources of capital, the greater financial leverage the firm is said to have. Too much debt can increase the risk of the company and reduce its financial flexibility, which at some point creates concern among investors and results in a greater cost of capital. Company management is responsible for establishing a capital structure for the corporation that makes optimal use of financial leverage and holds the cost of capital as low as possible.
Equity sharing is another name for shared ownership or co-ownership. It takes one property, more than one owner, and blends them to maximize profit and tax deductions. Typically, the parties find a home and buy it together as co-owners, but sometimes they join to co-own a property one of them already owns. At the end of an agreed term, they buy one another out or sell the property and split the equity. In England, equity sharing and shared ownership are not the same thing.
Business valuation is a process and a set of procedures used to estimate the economic value of an owner's interest in a business. Here various valuation techniques are used by financial market participants to determine the price they are willing to pay or receive to effect a sale of the business. In addition to estimating the selling price of a business, the same valuation tools are often used by business appraisers to resolve disputes related to estate and gift taxation, divorce litigation, allocate business purchase price among business assets, establish a formula for estimating the value of partners' ownership interest for buy-sell agreements, and many other business and legal purposes such as in shareholders deadlock, divorce litigation and estate contest.
John Burr Williams was an American economist, recognized as an important figure in the field of fundamental analysis, and for his analysis of stock prices as reflecting their "intrinsic value".
Valuation using discounted cash flows is a method of estimating the current value of a company based on projected future cash flows adjusted for the time value of money. The cash flows are made up of those within the “explicit” forecast period, together with a continuing or terminal value that represents the cash flow stream after the forecast period. In several contexts, DCF valuation is referred to as the "income approach".
Aswath Damodaran, is a Professor of Finance at the Stern School of Business at New York University, where he teaches corporate finance and equity valuation.
The following outline is provided as an overview of and topical guide to finance:
An alternative investment is an investment in any asset class excluding stocks, bonds, and cash. The term is a relatively loose one and includes tangible assets such as precious metals, collectibles and some financial assets such as real estate, commodities, private equity, distressed securities, hedge funds, exchange funds, carbon credits, venture capital, film production, financial derivatives, cryptocurrencies, non-fungible tokens, and tax receivable agreements. Investments in real estate, forestry and shipping are also often termed "alternative" despite the ancient use of such real assets to enhance and preserve wealth. Alternative investments are to be contrasted with traditional investments.
The First Chicago Method or Venture Capital Method is a business valuation approach used by venture capital and private equity investors that combines elements of both a multiples-based valuation and a discounted cash flow (DCF) valuation approach.
The Applied Finance Group (AFG) is a global, institutional equity research firm founded in 1995 by Rafael Resendes and Dan Obrycki.
Co-founder of The Applied Finance Group, Managing Director at Applied Finance Advisors, and Co-founder Applied Finance Capital Management. Resendes was raised in Atwater, California and moved to Chicago, Illinois in 1989 after receiving his Bachelor's Degree.
Dan Obrycki is the co-founder of The Applied Finance Group. Obrycki and Rafael Resendes together created Economic Margin (EM), AFG's proprietary framework, to evaluate corporate performance from an economic cash flow perspective. Obrycki is the head of AFG's main office in Chicago.
Entrepreneurial finance is the study of value and resource allocation, applied to new ventures. It addresses key questions which challenge all entrepreneurs: how much money can and should be raised; when should it be raised and from whom; what is a reasonable valuation of the startup; and how should funding contracts and exit decisions be structured.
Andrew Stotz, CFA is a former president of the CFA Society Thailand and is one of Thailand's award-winning equity analysts. He is also the founder and CEO of A. Stotz Investment Research (ASIR), a financial services company based in Bangkok, Thailand. Prior to launching ASIR he had spent 20 years working global investment banks in Asia. He has also been a university lecturer in finance for more than two decades and is a co-founder of CoffeeWORKS Co. Ltd., Thailand's specialty coffee roaster.
References
- ↑ "Equity Research Blog and Investment Newsletter | Value Expectations: Stock Research, Investment Newsletter, Global Equity Research". Archived from the original on 2009-07-06. Retrieved 2009-09-15.
- 1 2 Billy Fisher (2008-12-09). "Money Managers See Value in Large-Caps | ETF Update | Financial Articles & Investing News". TheStreet.com. Retrieved 2009-09-16.
- ↑ "Business Street fresno". Archived from the original on 2011-07-08. Retrieved 2009-09-22.
- ↑ "Archived copy". Archived from the original on 2011-07-14. Retrieved 2009-09-22.
{{cite web}}: CS1 maint: archived copy as title (link) - ↑ "Daniel Obrycki - Applied Finance Group Co-Founder | Global, Independent, Institutional Equity Research". Archived from the original on 2011-07-10. Retrieved 2009-09-15.
- ↑ "RealClearMarkets". RealClearMarkets. Retrieved 2009-09-16.
- ↑ "Value Expectations' Articles". Seeking Alpha. Retrieved 2009-09-16.
- ↑ "Riskiest Companies in the S&P 500 - New Money". usnews.com. 2009-04-03. Retrieved 2009-09-16.
- ↑ "Value Expectations - by the Applied Finance Group".
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