Price to Earnings Ratio – Introduction and Interpretation
Price to Earnings Ratio (P/E) is an analysis tool used to evaluate publicly traded stock.
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Value Investing
Value investing, in its simplest terms, means buy low, sell high, the universal primary tenet of business. Value investing is defined as a systematic process of purchasing high-quality stocks at an undervalued market price, quantified by intrinsic value and justified through financial analysis, then selling the stock promptly upon market price recovery.
This site teaches the investor about the four core principles of value investing. There are various in-depth sections, including tutorials about intrinsic value and security analysis.
Furthermore, there is a membership-only section that utilizes a Value Investment Fund with eight pools of different industries and 60-plus potential investments that are monitored regularly. This Fund has a six-year history of 25% annualized returns.
Long-Term Debt – Financial Statement Presentation
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.
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Vertical Integration in Business
Vertical integration in business refers to the process of gaining control over more steps of the product production stream. Whenever a business obtains or can greatly influence any one of these steps along the process of producing and selling a product, it is referred to as vertical integration.
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Real Estate Investment Trusts – REITs
Real Estate Investment Trusts are corporations, trusts or associations that act as agencies in real estate and associated mortgages. This is a specialized tax segment and it requires recognition by the Internal Revenue Service to operate as a Real Estate Investment Trust (REIT). In general, the REIT pays little to no income taxes and acts very similar to a pass-through entity for tax purposes. All REITs must comply with Code Section 856 which addresses compliance for this privileged tax advantage. Typically, REITs file Form 1120-REIT for tax purposes.
A secondary advantage for REIT status is the ability to raise capital via syndication. Section 856(a) and (b) require a minimum of 100 shareholders or owners of interest in the business entity. This allows for a more advantageous management situation by having a more formal elected board of trustees or directors. In addition, it allows for greater ease of transfer of ownership with the respective investors.
To fully appreciate the Real Estate Investment Trust, you should become acquainted with the history behind REITs. From there, there are unique advantages associated with REITs and an investment in one. As with all business situations, there are some disadvantages and you should be aware of them. The following sections cover these three topics and I’ll finish off with my own conclusion.
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Tangible and Intangible
Tangible and intangible are terms with several different meanings. A lot of well educated folks have a difficult time providing an all inclusive definition.
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Heads on Beds – Hotel Management
The hotel business has one tenet that stands above all other hospitality based business standards. Get heads on beds. Why does this one business standard have so much more value than any other? Well, it is simple, the fixed cost of operations for hotels are over 70% of all costs. Therefore any additional guest sleeping in one of the rooms adds significantly to the potential profit of the hotel.
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Value Investing – Absolute Dollars
In the hospitality industry, there is one financial tenet that takes precedence over any other business perspective. In this industry, it is about putting the maximum number of dollars (ABSOLUTE DOLLARS) in the register after each day. One of the most misunderstood business dynamics of this industry is the higher than average fixed cost to run the company.
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Syndication
Syndication refers to a group of individuals or business entities working together to achieve a set goal(s).
Gross Domestic Product (Lesson 21)
Gross Domestic Product is defined as the total production for the country. It is measured by including all the dollars spent to purchase products/services from all the various sellers of goods.
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Book Value – Definition and Usage
There are several definitions associated with the term ‘Book Value’ and depending on the context of its use, determines the correct definition and proper use.
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