The balance sheet, income statement, and cash flow statement are foundational to the financial reporting of any company. Public companies are considered to be held to a higher standard because of their mandate to follow Generally Accepted Accounting Principles (GAAP) but that hasn’t stopped several companies throughout history from cooking their books to post much…
Operating Income vs. Net Income: An Overview Operating income and net income both show the income earned by a company, but the two represent distinctly different ways of expressing a company’s earnings. Both metrics have their merits, but also have different deductions and credits involved in their calculations. It’s in the analysis of the two…
What Is an Escrow Agent? An escrow agent is a person or entity that holds property in trust for third parties while a transaction is finalized or a disagreement is resolved. The role of escrow agent is often played by an attorney (or notary in civil law jurisdictions). The escrow agent has a fiduciary responsibility…
Want to invest in the top software companies listed in the U.S.? Below is a list of the top publicly traded companies based in the United States, with market capitalization used as the primary criterion. Other figures like price-earnings ratio (P/E), earnings per share (EPS), and dividend yield are also included, if available. Key Takeaways Software has become…
Which annual investment return would you prefer to earn: 9% or 10%? All things being equal, of course, anyone would rather earn 10% than 9%. However, when it comes to calculating annualized investment returns, all things are not equal, and differences between calculation methods can produce striking dissimilarities over time. In this article, we’ll show…
What Is Effective Duration? Effective duration is a duration calculation for bonds that have embedded options. This measure of duration takes into account the fact that expected cash flows will fluctuate as interest rates change and is, therefore, a measure of risk. Effective duration can be estimated using modified duration if a bond with embedded…
What Is Mothballing? Mothballing is the deactivation and preservation of equipment or a production facility for possible future use or sale. It can also mean the setting aside of an object or idea for possible reuse or revisiting in the future. Mothballing is common with expensive capital goodsmachinery, aircraft, ships, properties, and other assets that…
What Is a Contingent Value Right (CVR)? The term contingent value right (CVR) refers to a right often granted to shareholders of a company facing restructuring or a buyout. These rights ensure that the shareholders get certain benefits if a specific event occurs, usually within a specified time frame. These rights are similar to options because they frequently…
What Is a Sinkable Bond? A sinkable bond is a type of debt that is backed by a fund set aside by the issuer. The issuer reduces the cost of borrowing over time by buying and retiring a portion of the bonds periodically on the open market, drawing upon the fund to pay for the…