Finance

Financial leverage means use of debt or borrowed capital to finance business, acquire additional assets or to increase profit. Financing a business depends on the capital structure of the company. Capital structure means the mixture of debt and equity financing to the business.Equity financing does not create any obligations on the company. However, debt financing obligates … [Read more...] about What is financial leverage and how it impacts business decisions

Weighted average cost of capital of a company is determined as the weighted average of a company's cost of equity and cost of debt blended together. In finer terms, it represents the rate of return that a project must have in order to attract investors to invest capital. WACC is also termed as cutoff rate or minimum rate of return or financing rate of return.WACC depends on … [Read more...] about How to calculate weighted average cost of capital for a company

A company's stock can be divided into two major types: Common stock or equity shares and Preferred stock or preference shares.Both type of stocks are split into smaller pieces known as shares. Owners of theses shares are known as shareholders or stockholders. In this article, we will discuss what is preferred stock and how it's different from common shares.Common stock … [Read more...] about What is Preferred stock and how it’s different from common stock

Intangible assets are those identifiable assets which have no physical substance and are not a financial instrument. This means you can not touch it.Intangible assets are disclosed under the head non-current assets on the company's balance sheet as these are long-term resources of the organization. The opposite of intangible asset is tangible or physical assets such as … [Read more...] about Understanding intangible assets on the balance sheet

Vertical analysis is a technique used to express line items of financial statements in relation to a single item or base. For vertical analysis of income statement, revenue is considered as a base and for balance sheet, total assets is considered as a base.It's also referred as vertical common-size analysis of financial statements or common-size vertical analysis of … [Read more...] about What is common-size vertical analysis of financial statements