See Also: Return On Equity Example Return on Asset Financial Leverage Gross Profit Margin Ratio Analysis Return on Equity Analysis Fixed Asset Turnover Analysis Return on Equity (ROE) The return on equity, or ROE, is defined as the amount of profit or net income a company earns per investment dollar. It reveals how much profit a company
See Also: Adjusted EBITDA Asset Market Value vs Asset Book Value Valuation Methods Goodwill Impairment Fair Market Value Definition The Fair Market Value definition is the price a specific property, asset, or business would be purchased for in a sale. A company’s fair market value should be an accurate appraisal of its worth. Calculating Fair
We are halfway through 2016 and, as technology rapidly progresses, the expectation for financial leaders to be practicing forward-thinking driven business is growing. It’s easy to fall into a habit of valuing historical data over forward-looking information. So how can you go from being historically-minded to forward thinking? First things first… Would you drive a car
See also: Role of a CFO 5 Ways a CFO Adds Value EBITDA Definition How Does a CFO Bring Value to a Company? Most CEOs don’t understand how a CFO brings value to their company. They see CFOs as overhead rather than income-producers. CEOs typically see the role of a CFO as a CPA or a
A while back, I read a study published by Accenture about how the role of the CFO is moving towards driving business growth and managing complexity. Encouragingly, of the 600+ senior finance executives and 30 CFOs and other senior finance professionals surveyed, 75% say that the CFO’s role in supporting strategic decision making is on the rise. 70% think that the CFO’s influence
See Also: Return on Invested Capital (ROIC) Return on Common Equity Internal Rate of Return Method Return on Investment (ROI) Definition Return on investment (ROI) is the ratio of profit made in a financial year as a percentage of an investment. In other words, ROI reveals the overall benefit (return) of an investment using the
Have you had to make an important decision and you kept weighing the alternatives, trying to decide which choice was more worthwhile? We all make important life decisions every day. We tend to focus on the benefit of our first choice and not the benefits of the next best choice. An opportunity cost is the
See Also: Valuation Methods Value Drivers: Building Reliable Systems to Sustain Growth Porters Five Forces of Competition Responsibility Center Cost Driver Value Chain Definition Value chain refers to the functional activities of a business that add value to its customers. The concept was created around 1985 by Michael Porter, Harvard Business School professor. According to
Throughput Definition Throughput is the number of units of output a company produces and sells over a period of time. Furthermore, only units sold count towards throughput. Do not count units produced but not sold during the time period as throughput. The goal of a profit-seeking organization is to maximize throughput while minimizing inventory and
See Also: Translation Exposure Currency Swap Exchange Traded Funds Hedge Funds Fixed Income Securities Transaction Exposure Definition Transaction exposure, defined as a type of foreign exchange risk faced by companies that engage in international trade, exists in any worldwide market. It is the risk that exchange rate fluctuations will change the value of a contract
See Also: Financial Ratios Internal Rate of Return Method Net Present Value Method Net Present Value vs Internal Rate of Return Required Rate of Return What The CEO Wants You to Know Return on Asset Definition Return on asset (ROA) reveals how much profit a company earned in comparison to its overall asset. The value
Purchase Option Definition Purchase option, defined as the opportunity to purchase a piece of property which is being leased after the lease is completed, is part of the many options available in a lease agreement. A purchase option is often agreed upon by the two parties involved before the contract is made. Purchase Option Explanation
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