Financial Management

When companies or businesses make decisions about new projects, they go through complex decision-making processes. One of these processes includes capital budgeting, through which companies can measure the returns they get. Using this process, they can estimate the increase in wealth they can provide shareholders through making investments. There are several tools that companies can […]

What is Beta? Beta is a metric used to measure the systematic risk or volatility of a specific security or investment compared to the market. It is one of the critical parts of the capital asset pricing model (CAPM). In that model, it represents the measure of systematic risk for a given security or stock.

What is Capital Budgeting? Capital budgeting is a process that companies or businesses perform when evaluating various capital investment projects. Through this process, they can determine whether a project or investment will be profitable in the future. It helps these companies in making decisions that can provide returns in the long run. It is one

What is the Capital Asset Pricing Model (CAPM)? The Capital Asset Pricing Model (CAPM) is a tool that investors and companies use when calculating the cost of capital. This model describes the expected return for assets and the systematic risk involved. Usually, CAPM is a tool that investors use when calculating the expected returns for

For most companies and businesses, profitability is one of the most critical success metrics. Most stockholders in companies focus on their profit-making ability. This profit is not only crucial for distributing among shareholders but can also provide a source of finance. Companies may choose to either hold their profits or distribute them to their shareholders.

Cash concentration refers to a treasury term that involves the pooling of cash funds from different accounts into a single centralized account. The term is often used together as concentration and disbursement. The cash concentration and disbursement take place to and from a single centralized treasury account of a company. It is also an important

Large projects require significant funding that is served through debt financing. Corporate institutes, banks, and creditors fund these large projects in tandem. The risks of default of the borrower or project failure are significant in such scenarios. Creditors may find it difficult to prioritize the claims to collateral in such a scenario. An intercreditor agreement

Leverage is the term used for funding a project through debt financing. A leveraged buyout is the use of borrowed capital to acquire a company. Private Equity firms actively perform LBOs to acquire public companies, convert them to private firms, and then sell them off. An LBO is one of the several types of mergers