Dividend Discount Model – What is DDM?

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The dividend discount model (DDM) is a numerical approach that estimates a company’s stock price by assuming that its current value is equal to the total of all future dividend payments, adjusted for their present value. This model aims to find the fair value of a stock, regardless of what’s happening in the market. It

Free Cash Flow to Equity – What is FCFE?

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Free cash flow to equity (FCFE) shows how much cash is left for the company’s equity shareholders after covering all costs, reinvestments, and debt obligations. It reflects how effectively equity capital is being utilized. Learn more about Free Cash Flow to Equity Free cash flow to equity includes net income, capital expenditures, working capital, and

CapEx – What is Capital Expenditure?

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Capital expenditures, or CapEx, refer to the money a company spends to buy, improve, or keep up physical assets like land, factories, buildings, tech, or machinery. Companies typically use CapEx to kick off new projects or make investments. For example, spending on capital expenditures might involve fixing a roof to extend its lifespan, buying new

PP&E – What Is Property, Plant, and Equipment?

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Property, plant, and equipment (PP&E) are essential long-term physical assets that play a crucial role in running a business. These assets aren’t something you can quickly turn into cash. The total worth of a company’s PP&E can vary significantly, from quite low to really high, especially when you look at it in relation to its

EPS – What is Earnings Per Share?

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Earnings per share (EPS) is a way to gauge how profitable a company is by showing how much profit each share of common stock has generated. You get it by taking the company’s net income and dividing it by the total number of shares that are currently outstanding. Basically, the higher the EPS, the more

FCF – What is Free Cash Flow?

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Free cash flow (FCF) is the cash a company has left over after covering its operational costs and maintaining its capital assets. What sets FCF apart from other cash flow metrics like earnings or net income is that it focuses on actual cash profitability, leaving out non-cash expenses found in the income statement. It also

What is CAGR (Compound Annual Growth Rate)?

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The compound annual growth rate (CAGR) is basically the average yearly growth rate of an investment over a span longer than a year. It’s a reliable method for figuring out returns on individual assets, investment portfolios, or anything that can change in value over time. You’ll often hear CAGR thrown around by investment advisors trying

What is NPV (Net Present Value)?

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Net present value (NPV) is basically the gap between the current value of cash coming in and the current value of cash going out over a certain timeframe. It’s a key tool in capital budgeting and investment planning to figure out how profitable a project might be. To calculate Net Present Value, you determine the

What is IRR (Internal Rate of Return)?

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IRR, or internal rate of return, is a key figure in finance that helps gauge how profitable an investment might be. It’s essentially the discount rate that brings the net present value (NPV) of all cash flows to zero when you’re doing a discounted cash flow analysis. Calculating Internal Rate of Return uses the same

What is RoR (Rate of Return)?

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A rate of return (RoR) is basically how much money you make or lose on an investment over a certain time frame, shown as a percentage of what you initially put in. When you figure out the rate of return, you’re looking at how much the value has changed from the start to the finish