IMPORTANCE OF BOOK VALUE

by veristrat

Investing requires a lot of discipline and meticulous research work before committing capital to a specific project as returns are never guaranteed. Selection of stocks by individual investors can be a daunting task whereby evaluating securities could be the tricky part. Often investors are caught in a web of information whereby sieving the relevant information and interpreting them is a tedious task. Hence, investors need to look at various parameters to assess a securities worth whereby evaluation of financial parameters holds a critical place.

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Synergy- Value or Myth

by veristrat

Economies of scale have always been at the forefront of the goals of an organization and in today’s cut throat competition, organizations are going all out to over par competitors. It is not unusual for a company to pursue merger or acquisition as a growth strategy. Most of the M&A transactions are justified by the value of synergy created. In this article we will discuss the concept of synergy, benefits, factors affecting pricing with a conclusion that synergy calculated is seldom delivered in acquisition due to lack of planning, lack of management foresight and the inability to overcome practical challenges.

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What is a 409A Valuation and Do I need it.

by veristrat

Startups are not cash rich, but employee salary expense is something that needs to be incurred every month. Most of the startup firms in order to circumvent this expense and at the same time reward their employees give them stock options and stock appreciation rights (SARs), these two common forms of incentive compensation for private companies are potentially within the scope of Section 409A code.

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Equity Value and Enterprise Value

by veristrat

Valuation is an integral part in the field of finance and has significance in different areas such as merger and acquisitions, corporate finance, financial reporting etc. The value of a firm is a reflection of its operating, financing and investing decisions. When a valuation analyst values a company, the terms equity value and enterprise value are first to come in mind, where equity value is the market capitalization of the company i.e. the portion available to its shareholders and enterprise value is a measure of company’s total value that is attributable to all its investors. In other words equity value is the number which public at large sees while enterprise value represents its true value. In terms of formula:
Equity Value = Common Shares Outstanding * Share Price
Enterprise Value = Equity Value + Debt – Cash + Minority Interest + Preferred Stock

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IMPORTANCE OF COMPOUNDING IN VALUATION

by veristrat

Investing is the act of committing money or capital to an endeavor with the expectation of obtaining an additional profit. For any investor, assessment of fair value of a security is of paramount importance before investing to assess the real worth of their investment because what one pays is price and what is received is value. Hence, one needs to assess the valuation/ fair value of the security and is also required to estimate its future potential for value creation (compounding).

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Interdependency of Economic Indicators

by veristrat

The role of and interdependence of certain economic indicators has always attracted the attention of investors and economists alike. There has always been a debate on the aspect as to which economic factor Employment or Consumer activity affects the GDP more than the other.
Employment
The most important indicator of the health of an economy is its employment rate. It is widely recognized as a key indicator of labour market performance and closely watched economic indicator. The national unemployment rate is defined as the percentage of unemployed workers in the total labour force. The employment situation report also influences other important indicators, such as consumer confidence and consumer sentiment.

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DIVIDEND POLICY

by veristrat

An investor cannot evaluate any investment, whether it’s a stock, bond, rental property, collectible or option without a return. In case of stock, dividend is a form of return to the stockholders of the company. Dividend is one of the important ways with which companies communicate its financial position and the shareholder value too. In this article, we’ll cover the types of dividends policy and factors affecting them.

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QUANTITATIVE EASING – AN INSIGHT

by veristrat

Quantitative Easing can be defined as a type of unconventional monetary policy whereby the central bank controls money supply within the economy through purchase and sale of financial assets from commercial banks and various other financial institutions. It intends to stimulate economic growth at the time of recession and stabilize high inflation periods when the conventional models does not seem effective.

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SECONDARY BUYOUTS: HOW THEY CREATE VALUE

by veristrat

Private Equity firms generally deploy a number of strategies to maximize the value creation of their investments. Profitability of any investment depends upon realization of a successful exit strategy. Traditionally, private equity firms resort to three exit options namely, a Corporate Acquisition, IPO and Secondary Buyouts. Earlier IPO’s or corporate acquisitions were considered as successful exits as these tend to maximize their returns, however, of lately secondary buyouts have gained importance as a preferred exit route.

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IPO Insights & Listing across Stock Exchanges

by veristrat

The Initial Public offering (IPO) is a mechanism by which company offers to sell its shares to public in order to raise funds to finance their future growth and expand their business activity. Doing an IPO is referred to as “going public”, as it allows the company to get listed on any favorable exchange and raise capital from public. Going public ensures that companies fulfil all the regulatory and compliance requirements of the exchange and a successful IPO will provide a company its true valuation, good public image and low cost of borrowing.

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