A P/E (price-to-earnings) ratio is a metric that compares a company’s share price to its annual net profits. This ratio can be used to compare companies of similar size and industry to help determine which company is a better investment. A P/E ratio is also an important metric to help determine the future profitability and …
A merger takes place when two companies combine to form a new company. Companies merge to reduce competition, increase market share, introduce new products or services, improve operations, and, ultimately, drive more revenue. Understanding mergers is essential if you’re considering a career path in mergers and acquisitions (M&A), a branch of investment banking or corporate …
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Debt capital markets (DCM) is a division of investment banking and a concept in corporate finance. As a concept, a debt capital market is a space for companies and governments to buy and sell debt as a way to raise capital or make a profit. DCM divisions of investment banking companies facilitate the creation and …
An initial public offering, or an IPO, is when a private company decides to go public and make its shares available to the public market for the first time. Many well-known companies have gone through the IPO process, such as Meta (Facebook) and General Motors. Going public is alluring for many private companies because they …
A stock option is a contract between two parties, like a company and an employee, that gives the owner of the option the right, but not the obligation, to purchase or sell stocks at an agreed-upon price. Basically, if you own a stock option, you have the option to buy or sell the underlying stocks. …
An acquisition is a business transaction that occurs when one company purchases and gains control over another company. These transactions are a core part of mergers and acquisitions (M&A), a career path in corporate law or finance that focuses on the buying, selling, and consolidation of companies. In this guide, we’ll cover: What Is a …
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A business valuation is a way to determine how much a company is worth. Determining the value of a business is important in many contexts, such as for tax purposes or selling a company. In this guide, we’ll go over: What Is Business Valuation Used For? Knowing how much a business is worth can be …
Stock charts are graphs that show how a company’s publicly traded shares are performing. These charts can show a company’s stock performance over time periods ranging from several years to a few days. You can also even watch a company’s stock change throughout the day while the market is open. Reading a stock chart can …
Comparable company analysis is a way to determine how much a company is worth by comparing it to other companies of similar size in similar industries. Comparable company analysis is sometimes referred to by other names, such as comparable analysis, comps analysis, comps valuation, or public comps valuation. They all mean the same thing, though. …
CAGR, which stands for compound annual growth rate, is the rate at which an investment grows. Finance professionals calculate the CAGR for investments between two points in time (typically years or months) to understand how well the investment performed in that period. Compound annual growth rates are useful for comparing the historical performance of investments …
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