Goldilocks Economy
Not too hot and not too cold. An economy with sound growth, inflation in the target range, a decent job market, interest rates that are stable. Could this be a Goldilocks Economy. The term “A Goldilocks Economy” describes an Economy which is sitting just about right, in terms of rate of economic growth. Stable inflation, […]
Gross Operating Profit
Entries at the top of the Profit and Loss, are used to calculate Gross Operating Profit, Sales – COGS – Selling Expenses. Gross Operating Profit divided by Sales, gives the Gross Operating Profit Margin. An understanding of a Company’s Gross Operating Profit is key as this is directly related to the core operations of the […]
Free Cash Flow
Free Cash Flow is an important number to consider as it determines the Cash Flow available to pay the Company’s Financial Stakeholders, Debtors and Shareholders. Free Cash Flow (FCF) is the total cash flow generated by a company from normal operations. The calculation is made by taking Retained Earnings, adjusting for non-cash expenses in the […]
Futures Contract
Futures Contracts are issued on a wide range of Financial Instruments and Commodities. The contracts are Exchange-Traded and standardised to facilitate trading. A Futures Contract is an agreement to either Buy (Long Futures) or Sell (Short Futures), a set amount of a commodity or financial instrument. The two major Futures Exchanges in the U.S. are […]
Financial Statements
A Company’s Annual Accounts are comprised of the three Financial Statements, the Profit and Loss (P&L), the Balance Sheet and the Cash Flow Statement. There are three Financial Statements which together make up a company’s Annual Accounts. In general, they are prepared under one of two main Accounting Standards, GAAP (Generally Accepted Accounting Principles) – […]
Federal Reserve Board
The Board of Governors at the Federal Reserve consists of seven members known as the Federal Reserve Board of Governors. The Board of Governors at the Federal Reserve Bank consists of seven members, known as the Federal Reserve Board (Board) one of whom will be the Chairman. The Board is charged with governing the Federal […]
Economic Cycle
An Economy passes through an Economic Cycle, from peak growth to trough, the transition phases and back to the peak. There are the various phases and characteristics of each phase for a complete Cycle. The relative strength or weakness in various Economic data points such as Unemployment, Consumer Confidence, Inflation, Industrial Production will characterise each […]
EBITDA
EBITDA stands for Earnings Before Interest, Taxes, Depreciation and Amortisation. EBITDA is calculated from a Company’s Profit & Loss, focusing on the Cash Earnings before Interest Expense and Taxes. EBITDA measures a Company’s Operating Cash Flow before deducting the non-cash items of Depreciation and Amortisation, calculated by the formula. EBITDA = Sales – Op Expenses […]
Exchange Traded Funds (ETFs)
ETFs are passively managed Mutual Funds, which are Exchange Traded. An individual ETF could distinguish itself by tracking a major Equity Index (S&P 500), a Sector, a Market Cap range or an Investment Style. An ETF is a pooled investment vehicle or Mutual Fund, which is actively traded on a Stock Exchange. Where ETFs and […]
Estimates
Earnings Estimates are forecasts issued by Equity Analysts for key data points, mainly for the Profit and Loss, Sales and EPS. A more comprehensive forecast could include Balance Sheet and Cash Flow data. Equity Analysts will issue their forecasted Earnings Estimates for the Companies that they follow. The most common data points issued include Sales, […]
