This phase of the lesson sets explains intrinsic value and financial analysis. There is no single formula that is universal; there are at least six common formulas to calculate intrinsic value. The various formulas require the user to understand the five different financial statements and how to properly interpret them.
Shifting from economic wide factors that impact market price to industry wide standards is essential with understanding and creating decision models for investment with a pool of similar companies.
Industry Principles and Standards (Lesson 25) Read More »
With value investing, understanding the concepts of economics allows for a more comprehensive elevation of thought related to financial analysis.
Concepts of Economics and Business Models (Lesson 19) Read More »
If you think of the economy as a train pulling a load on the track, you would base its near future position on its current and historical trend. It is unlikely its current speed will change; thus, we can predict its future position with some degree of confidence.
Economic Uncertainty (Lesson 23) Read More »
Insolvency refers to the ability to pay bills in a timely manner. It does not mean bankruptcy but long-term insolvency is a underlying factor of bankruptcy.
Insolvency – Detection Read More »
Of the basic business principles, economies of scale has the greatest impact on profitability over any other business principle. As an enterprise’s investment is spread over higher volume the cost per unit of production decreases.
Economies of Scale (Lesson 24) Read More »
Break-even analysis is a managerial (cost) accounting tool used to examine the relationship of price to cost of a product. It also considers various sales volumes and the effect on profit given the different relationships of price to cost.
Break-Even Analysis – Fundamentals Read More »
Those small publicly traded businesses with share prices of less than $5 and capitalization of less than $50 million are referred to as penny stocks.
Penny Stocks- Introduction Read More »
The word ‘Profit’ is used loosely in the business world. Profit refers to the amount earned net of costs in a transaction. The key is defining a transaction.
Gross, Operational and Net Profit (Differences) Read More »
One of the terms synonymous with the field of economics is ‘Elasticity’. The term refers to the change in either the demand or supply (the other terms synonymous with economics) curve when there is a change in the price.
Elasticity in Economics (Lesson 22) Read More »
Long term debt is one of the multiple forms of capitalizing a business. It includes bonds, secured notes and mortgage notes. In the world of small business, the most common form of long term debt is secured notes, most likely with recourse.
Long-Term Debt – Financial Statement Presentation Read More »
