Capital Markets

Weighted Average Shares Outstanding

What is Weighted Average Shares Outstanding? Weighted Average Shares Outstanding (WASO) is a company’s average shares outstanding during a specific period, weighted by duration.

Weighted Average Cost of Capital (WACC)

What is Weighted Average Cost of Capital? Weighted Average Cost of Capital (WACC) is the average rate of return that different investors in a company require, weighted by how much they invested.

Risk-Free Rate

What is Risk-Free Rate? Risk-Free Rate is the rate of return on an investment with zero risk.

Paid-In Capital

What is Paid-In Capital? Paid-In Capital is the total amount of money equity investors have invested into the company during stock issuances. Said differently, it’s the total amount of cash a company has raised from investors through stock issuances. It’s called “Paid-In Capital” because it’s…

Market Capitalization

What is Market Capitalization? Market Capitalization (Market Cap) is the value of the company entitled to the shareholders based on the market price. Shareholders are the owners of the company. Therefore, Market Capitalization represents the total value that belong to the company owners.  Market Cap…

How to Calculate Intrinsic Value of a Stock

Let’s Define the Intrinsic Value of a Stock [To Come]

Fully-Diluted Shares Outstanding

What is Fully-Diluted Shares Outstanding? Fully-Diluted Shares Outstanding (FDSO) is a company’s total share count including both existing shares and potential shares from dilutive securities.  

Equity Value

What is Equity Value? Equity Value is the value of a company available to its owners. The company owners are shareholders. Therefore, Equity Value is the value of the company that belong to shareholders. Equity Value = Stock Price x Shares Outstanding.

Equity Risk Premium

What is Equity Risk Premium? Equity Risk Premium (ERP) is the additional returns investing in the stock market provides, in excess of the Risk-Free Rate. ERP = Stock Market Return – Risk Free Rate.

Enterprise Value

What is Enterprise Value? Enterprise Value (EV) is the value of a company’s business operations. Enterprise Value is calculated as Equity Value plus Debt Outstanding minus Cash & Cash Equivalents minus Investments. It’s the price to buy the entire business as a whole and is…

Cost of Equity

What is Cost of Equity? Cost of Equity is the rate of return that investors require to invest in the company’s common stocks.

Cost of Debt

What is Cost of Debt? Cost of Debt (CoD) represents the rate of investment return that debt investors require in order to invest in the company’s debt.

Testing

Impairment Charge is an expense that reflects a reduction in the carrying value of an asset on the Balance Sheet. The impairment occurs when the carrying value of a particular asset on the Balance Sheet exceeds its fair market value. While any asset can suffer…