How can you calculate volatility in Excel?

June 30, 2024 No Comments

A: Although there are several ways to measure the volatility of a given security, analysts typically look at historical volatility. Historical volatility is a measure of past performance. Because it allows for a more long-term assessment of risk, historical volatility is widely used by analysts and

How are operating income and EBITDA different?

June 30, 2024 No Comments

A: EBITDA (earnings before interest, taxes, depreciation, and amortization) measures a company’s profitability and is typically used to determine the earnings potential of a company. EBITDA removes the costs of debt financing as well as depreciation, and amortization expenses from profits. Also, EBITDA shows a company’s profit without taxes and interest expenses on debt. As a result, EBIDTA can be

How are profit margin and markup different?

June 30, 2024 No Comments

A: Profit margin and markup are two different accounting terms that use the same inputs and analyze the same transaction, yet they show different information. Typically, profit margin refers to the gross profit margin for a specific sale, which is revenue minus the cost of goods sold, but the

How are the three major financial statements related to each other?

June 30, 2024 No Comments

A: The information found on the financial statements of an organization is the foundation of corporate accounting. This data is reviewed by investors and lenders for the purpose of assessing the company’s level of financial stability. Data found in the balance sheet, the income statement

How can a company have a negative gross profit margin?

June 30, 2024 No Comments

A: Gross profit margin shows how well a company generates revenue from the direct costs like direct labor and direct materials involved in producing their products and services. Gross profit margins turn negative when the costs of production exceed total sales. This could be an indication of a

How can average investors get involved in an IPO?

June 30, 2024 No Comments

A: An initial public offering, or IPO, is the first sale of stock by a new company, usually a private company trying to go public. An IPO often serves as a way for companies to raise capital for funding current operations and new business opportunities.

How can EV/EBITDA be used in conjunction with the P/E ratio?

June 30, 2024 No Comments

A: Because they provide different perspectives of analysis, the EV/EBITDA multiple and the P/E ratio can be used together to provide a fuller, more complete analysis of a company’s financial health and prospects for future revenues and growth. The EV/EBITDA Ratio The EV/EBITDA ratio compares

How can I calculate compounding interest on a loan in Excel?

June 30, 2024 No Comments

A: What is Compound Interest? Compound interest, also known as compounded interest, is interest that’s calculated both on the initial principal of a deposit or loan, and on all previously accumulated interest. For example, let’s say $100 represents the principal of a loan, which carries a compounded interest rate of 10%. After

How can I calculate the leverage ratio using tier 1 capital?

June 30, 2024 No Comments

A: The tier 1 leverage ratio is used to determine the capital adequacy of a bank or a holding company, and it places constraints on how a bank may leverage its capital. Calculate a bank’s tier 1 leverage ratio| by dividing its tier 1 capital

How can I calculate the notional value of a futures contract?

June 30, 2024 No Comments

A: Calculate the notional value of a futures contract by multiplying the size of the contract by the price per unit of the commodity represented by the spot price. For example, one soybean contract is comprised of 5,000 bushels of soybeans. At a spot price

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