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.
Bear call spreads, or bear call credit spreads, are options strategies employed by options traders who expect the underlying assets price to decline in the future. So, it’s a bearish approach because the expectation is about a decrease in the price for underlying assets. Further, it’s a credit spread because the net premium received is […]
What is Bear Call Spread? Read More »
Bull put spread is an options strategy; it’s suitable for the traders that want to limit their loss. However, it comes with restricted profitability. In this article, we shall discuss detailed characteristics of the strategy, including opening the position. An investor uses a bull put spread when they believe the underlying asset will rise moderately
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Credit spreads and debit spreads are the strategies to trade-in options. In the title context, the spread is a difference between receipt and payment of the premium on writing/purchasing options. So, if the receipt is higher than payment on exchange of options, it’s called credit spread. On the other hand, if payment is higher than
Credit Spreads vs debit spreads: What are the Differences? Read More »
Options are a derivate instrument, and their value is dependent on the underlying assets. It’s used to realize speculation on the movement of an underlying asset. If the price of the underlying asset moves in expectation of the buyer of the options, it generates a financial return for them. The other side movement can lead
What are credit spread options? Butterfly and Condor strategy of options Read More »
Definition Credit spread refers to the yield differences between two bonds of the same maturity and different credit quality. One of the bonds is typically set as a benchmark. For instance, one bond can be a US Treasury bond (benchmark), and the other can be a corporate bond; there is an expected yield difference between
What is Credit Spread? Definition, Formula, Example, Interpretation, and More Read More »
The cash operating cycle is the time taken by the business to realize its cash investment. In simple words, the business has to invest cash in purchasing the raw material, labor, overheads, and other business-related operations. However, it takes time for the business to realize cash, and holding of cash incurs finance expenses. Hence, businesses
How to improve the cash operating cycle? Read More »
The cash conversion cycle measures the number of days between your date of payment for the goods and the date of receiving cash from customers. In simple words, it’s the time between cash going from the business and cash being received by the business. On the other hand, the operating cycle measures the number of
Cash Conversion Cycle Vs Operating Cycle: What Is the Difference? Read More »
Overcapitalization occurs when a business acquires more capital investment than needed. It may require substantial capital investment for working capital or capital investment projects. However, inaccurate forecasting and other reasons may lead a business to excessive capital. Overcapitalization can have negative impacts on the working capital management of a business. It also affects the profitability
Overcapitalization – Definition, Indicators, and Solutions Read More »
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
What is Overtrading in Working Capital Management? Read More »
Enterprise value (EV) and market capitalization (or market cap) are important metrics to analyze the value of a company. The market cap figure offers valuable information about the equity value of the firm. Contrarily, the EV calculations consider the equity value, debt incurred, and cash held by a company. Thus, it offers a comprehensive analysis
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