Assets that can be easily converted to cash within one year. They include assets like cash, accounts receivable and inventory.
A measure of correlation of fluctuations between two different things. Covariance is applied in finance to the return on investment of various investments to measure the correlation of their year to year changes in performance. The formula for it is:
Cov(r1, r2) = 1/n * Σ (r1 i – r1 ave) * (r2 i – r2 [...]
The annual interest rate paid by a bond. It is expressed as a percentage of its par value. (The price the bond issuer promises to pay on its date of maturity).
Like a regular bond, but with the option for the bond holder to convert the bond into a set number of shares of common stock. Like regular bonds, convertible bonds also pay interest.
The total amount of goods and services purchased by individuals. Consumer spending currently accounts for about 2/3 of the Gross Domestic Product of the United States economy. This figure includes the purchase of both domestic and foreign produced goods.
A statistic that expresses consumers’ sentiment about the economy and their plans to make purchases. The consumer Confidence Index and Consumer Sentiment Index are indices that are calculated through household surveys and reported monthly.
In layman terms, Consumer Confidence is how confident people are about the economy.
Financial Statements that combine the activities of a business and its subsidiaries into one document. See Balance Sheet and Income Statement.
The interest rate at which a value would increase to a given value in a set amount of time. The formula is:
CAGR = (FV/PV)1/n – 1
Where FV equals the Future Value, PV equals the Present Value and N is the number of years.
The sum of cash and investments that are “as good as cash” that can be cashed out within a short period of time. Examples include Checking Accounts, CDs, Money Market Accounts and Treasury Bills. Things like Real Estate and Intellectual Property are NOT cash equivalents because they can not immediately be redeemed for cash.
Spending on equipment with a useful life span of greater than one year. The amount spent on these items affects the investing section of the cash flow statement in the year purchased, then gets expensed over several years on the income statement through depreciation.
A profit, or ‘gain’, made from buying something (property, shares of stock, a business, etc) and reselling it at a higher price. The difference between the price bought and sold is the ‘capital gain’.
Capital gains are usually taxed at a lower rate than regular income. You can use a capital gains calculator to calculate the [...]
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