Accounting Case Study – General Ledger and Trial Balance
We had started our case study for explaining accounting concepts. You can view the case study introduction at the following link: Accounting Skills – Case Study For journal entries visit: Accounting...
View ArticleElements of Financial Statements
Though it is said organizations have an indefinite life, in reality they do have a particular life cycle. These are birth, growth, plateau and finally no growth or decline. This is not unlike a product...
View ArticleElements of Balance Sheet
Balance sheet is one of the most important financial statements. To understand a balance sheet better, let us take a look at the elements of their balance sheet. As you can see, the balance sheet shows...
View ArticleSources of Return from Investing in a Bond
A fixed-income security, such as a bond, provides three different types of returns, and a yield measure used by the investor should consider all these three sources of return. These are: the coupon...
View ArticleIncome Statement
A lot of things hinge on a company’s profit. Profits determine bonuses, dividends to shareholders, timely repayments to banks and an important measure to attract investors. To understand an income...
View ArticleCash Flow Statement
Cash Flow is indicative of a company’s financial health. Problems in cash flow may point to issues in product pricing, operating efficiency and credit policy. Statements of cash flow give an indication...
View ArticleCash Flow Statements – Direct and Indirect Method
A cash flow statement can be presented using two methods: Indirect Method Direct Method The two methods differ in terms of how the cash flow from operating activities is calculated. In the indirect...
View ArticleSignificance of Cash Flows
If a company has a high demand for its product, the product has high margins, makes purchases and pays on time, shows an increasing trend in profits, the business is a hit, right? Well, not always. In...
View ArticleBest Movies about Money and Finance
We compiled a list of some of the best movies related to finance, financial crisis, and stock markets. Client 9: Rise and Fall of Eliot Spitzer This documentary feature takes an in-depth look at the...
View ArticleMaking MSN Stock Quotes Add-in Work in Excel 2010
This post is with reference to the MoneyCentral Stock Quotes Add-in that we had talked about sometime back. Many people have been happily using it with their versions of excel. However, some people...
View ArticleHow to Calculate Current Yield
The current yield of a bond measures the interest income that an investor gets from the bond. It’s represented using the following formula: Current Yield = Annual Coupon Interest/Bond Price Where,...
View ArticleHow to Calculate Yield to Maturity
Yield to Maturity (YTM) is the most commonly used and comprehensive measure of risk. In fact, if someone talks about just ‘Yield’ they are most likely referring to Yield to Maturity. In simple terms,...
View ArticleBond Equivalent Yield Convention
In the bond market the convention is to annualize the semi-annual yield by simply doubling it. So, if the semi-annual yield is 3%, the annual yield is calculated simply as 3% x 2 = 6%. The annual yield...
View ArticleYield to Maturity (YTM) Approximation Formula
Calculating yield to maturity can sometimes be a tedious process because we need to do trial and error to arrive at the exact yield. In this article we provide an approximation formula to calculate YTM...
View ArticleYTM and Reinvestment Risk
Yield to maturity calculates the total return an investor would earn by holding the bond till maturity. This includes both the coupon income and the capital gains from the bond. It also considers...
View ArticleFactors Affecting Reinvestment Risk
As we learned in the previous article, coupon paying bonds have reinvestment risk because the investor is expected to invest the cash flows from the bond at the same rate as yield-to-maturity (YTM) to...
View ArticleCalculate Bond-Equivalent Yield of Annual-Pay Bonds
In the US, most bonds are generally semi-annual coupon paying bonds, so we calculate the semi-annual yield and then calculate the bond-equivalent yield (annualized) by simply doubling the semi-annual...
View ArticleHow to Calculate Yield to Call of a Bond
For callable bonds that are likely to be called before their maturity, it is more useful to calculate yield to call instead of yield to maturity. The formula and steps to calculate yield to call are...
View ArticleCash Flow Yield
For some debt products such as mortgage-backed securities, we calculate cash flow yield instead of yield to maturity. This is because investors in mortgage-backed securities receive their cash flow...
View ArticlePredict Stock Trends Using MACD
This is the simplest technical tool used by analyst to predict stock trends. MACD stands for Moving Average Convergence Divergence and was originally developed by Gerald Appel. This technique has...
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