Finance

This category covers all kinds of topics in finance including corporate finance and financial management. The topics on financial institution and stock exchange will also be included.

What is Overtrading in Working Capital Management?

Overtrading means planning an aggressive and overambitious growth plan. It results when a business undertakes trading activities more than the resources it possesses. Overtrading is a working capital management problem and its causes and solutions also revolve around it. A business must fully understand the reasons for overtrading to create an effective plan to reduce …

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Market Capitalization: Definition, How Market Capitalization Is Calculated, and More

Market capitalization is theoretically the market value of the equity of a company or corporation. It represents the equity side of the total valuation of a company. Market cap can be used as a useful tool in the total market valuation analysis. However, unlike the common notion, it does not represent the total market value …

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Market Value of Equity: Definition and How to Calculate It

Companies obtain capital from two sources, including equity and debt. Equity is the finance that comes from a company’s shareholders. Usually, this equity is in the form of shares or preferred stocks. These shares may also come with voting rights. Debt, on the other hand, is finance received from third parties. It usually carries an …

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Market Value of Debt: Definition and How to Calculate It

When companies raise finance, they generally have two options. The first is equity, which represents funds they can get from shareholders. Usually, equity is an easier option for companies due to the availability of these funds. Companies can get equity finance from new shareholders or existing ones. However, equity finance is usually more expensive due …

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Advantages and Disadvantages of Venture Capital

Companies and businesses need finance to operate. Some companies have affluent owners that provide them with this finance. Others can raise finance through their existing shareholders. Similarly, some companies can also generate funds from the public. However, small companies and startups usually don’t have these facilities. For these companies, obtaining finance is a substantial challenge. …

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Secured vs Unsecured Bonds – Key Differences and Implications

Secured bonds come with a pledge of collateral. Unsecured bonds are issued by entities with higher credit ratings and do not offer collateral. Investors can analyze both types of bonds for the perceived risks. Both types of bonds carry a varying degree of default risk. Thus, the return on investment will also be different. Let …

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