Economic conditions and the performance of the market influence the return on investment. Return types along with CAGR can be used to evaluate a fund’s performance. Types of mutual fund returns are Absolute ReturnAnnual ReturnTotal ReturnAnnualized ReturnTrailing Return Absolute Return Absolute Return or Point-to-Point return calculate the growth in investment, [...]
Compound annual growth rate (CAGR) is the cumulative performance of an investment over a period of time, assuming the profits were reinvested at the end of each year of the investment’s lifespan. It is used to measure and compare the performance of investments, or to project their expected future returns. [...]
An exchange traded fund (ETF) is a basket of securities i.e. stocks, bonds, commodities or some combination of these. ETF offer diversification benefits of mutual funds while mimicking the ease with which stocks are traded. An ETF is a basket of securities that you can buy or sell through a [...]
Market value ratios are the financial metrics which are used to evaluate the stocks of publicly traded companies. These ratios are used to check whether the share’s prices are valued correctly in the market. If a share is overpriced, the price might fall in the future. Types of Market Value [...]
Liquidity ratios measure a company’s, i.e. its ability to convert its assets to cash and pay off its obligations (short term and long term obligations). Types of Liquidity Ratios Conmanly used Liquidity Ratios are Current RatioQuick RatioCash RatioOperating Cash Flow Ratio Current Ratio It measures the capability of a company [...]
Solvency ratios measure a company's ability to pay off its long-term obligations such as bank loans, bonds payable, etc. Better solvency ratios indicate a more creditworthy and financially sound company in the long-term. Shareholder’s Funds (Owner’s Equity) portion out of the total liabilities determines the Solvency of a company. Types [...]
Activity ratios measure a company's ability to convert assets and liabilities into cash or sales. The faster it is able to do this, the more efficiently it is operating. Types of Activity Ratios Conmanly used Activity Ratios are Total Asset TurnoverFixed Asset TurnoverWorking Capital TurnoverReceivables TurnoverInventory TurnoverPayable Turnover Total Asset [...]
It measure company’s ability to generate income relative to its revenue, operating costs and other cost associated with the generation of income during a particular period. Types of Profitability Ratios Conmanly used Profitability Ratios are Return on Equity (ROE)Return on Assets (ROA)Gross Profit MarginOperating Profit Margin Pretax Margin is the [...]
Balance sheet tracks the change in the company's cash balance from one year to the next. However, it does not tell us why the cash balance changes. Income statement is prepared under the accrual basis of accounting, the revenues reported may not have been collected or turned into cash. Statement [...]
Income (or Profit and Loss) statement is financial statements that shows company profit or loss over a period of time. The profit or loss is determined by taking all revenues and subtracting all expenses from both operating and non-operating activities. It is of interest to analysts, investors, and potential investors, [...]