What does it mean when airline revenues are adjusted for air traffic liability?

July 9, 2024 No Comments

A: Airline revenue adjustments for air traffic liability are simply part of the accrual accounting method that airlines commonly use. Revenues are adjusted at the time of ticket sales in recognition of the fact that the airline has thereby incurred the liability of providing the

What does it mean when my broker says that shares are for auction?

July 9, 2024 No Comments

A: An auction market is one in which stock buyers enter competitive bids and stock sellers enter competitive offers at the same time. If this sounds like buying and selling stock on a stock exchange, you’re right. It is worth noting that before stocks are

What does negative shareholder equity on a balance sheet mean?

July 9, 2024 No Comments

A: N egative shareholder equity could show up on a company’s balance sheet for a number of reasons, all of which should serve as red flags to look much closer before investing. To understand why, you need to look no further than the formula for

What does the Efficient Market Hypothesis have to say about fundamental analysis?

July 9, 2024 No Comments

A: The efficient market hypothesis (EMH) is at odds with fundamental analysis because of its assumptions about the availability of information and the rationality of the market. Fundamental analysis requires a thorough assessment of a company’s financial position and prospects. Based on some combination of

What does the forward p/e indicate about a company?

July 9, 2024 No Comments

A: The price to earnings (P/E) ratio compares the share price of a company to the earnings it generates per share. The formula used to calculate this ratio simply divides the market value per share by the earnings per share (EPS). The typical calculation of

What does the S&P 500 index measure and how is it calculated?

July 9, 2024 No Comments

A: The S&P 500 measures the value of stocks of the 500 largest corporations by market capitalization listed on the New York Stock Exchange or Nasdaq Composite. Standard & Poor’s intention is to have a price that provides a quick look at the stock market

What does the term “stock-for-stock” mean?

July 9, 2024 No Comments

A: The term “stock-for-stock” is popularly used in two different contexts, and it regularly makes business news headlines in both. “Stock-for-stock” most commonly appears in headlines in reference to the stock-for-stock merger. In this type of merger, the acquiring company trades shareholders of the target

What exactly does EBITDA margin tell investors about a company?

July 9, 2024 No Comments

A: EBITDA stands for earnings before interest, taxes, depreciation and amortization. EBITDA margins provide investors a snapshot of short-term operational efficiency. This measure is similar to other profitability ratios, but it can be especially useful for comparing companies with different capital investment, debt and tax

What factors are taken into account to quantify credit risk?

July 9, 2024 No Comments

A: The quantification of credit risk, assigning measurable and comparable numbers to the likelihood of default or spread risk, is a major frontier in modern finance. The factors that affect credit risk range from borrower-specific criteria, such as debt ratios, to market-wide considerations such as

What factors go into calculating social return on investment (SROI)?

July 9, 2024 No Comments

A: Social return on investment (SROI) is a method for measuring values that are not traditionally reflected in financial statements, including social, economic and environmental factors, which can identify how effectively an organization uses its capital and other resources to create value for the community.

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