Many people have a poor understanding of their motivations and values. They will say that charm pricing is stupid, and may round up prices in their head. These people have no idea what they really value. But if you...
What is a liquidity event and why do companies undergo them
A liquidity event is a situation in which a company's assets are converted into cash. This can happen through an IPO (initial public offering), the sale of the company,...
How to Calculate an Operating Expense Ratio
You should ask the seller to provide a prior year's operating statement and calculate the Operating Expense ratio. Total operating expenses are property taxes, management fees, utilities, insurance, marketing, and salaries. Depreciation is...
What is a closed economy
A closed economy is an economic system in which trade between countries is restricted by tariffs, quotas, or other forms of regulation. In a closed economy, the production and consumption of goods and services are...
What is the liquidity premium and why do investors demand it
The liquidity premium is the return that investors expect for holding a liquid asset over a less liquid one. In other words, it is the compensation that investors demand...
What is horizontal equity and why is it important
Horizontal equity is the principle that people who are in the same situation should be treated equally. This principle is often applied to issues of taxation, but it can also be...
When buying a home, most people opt to finance the purchase through a mortgage. Although many people choose a mortgage to finance a home purchase, some who have cash choose a mortgage over cash purchases and retain the money...
When determining borrowing base, it is crucial to understand the valuation of your business' inventory and equipment. Typically, this valuation is based on the current market value of the inventory or equipment, which is the value the inventory and...
What is a Declaration of Trust and what are its benefits
A Declaration of Trust is a legal document that sets out how a property is to be owned and/or occupied. It can be used in a number of different...
How the Overhead Rate is Calculated
The overhead rate on a company's income statement and balance sheet impacts the company's cost of goods sold. Investopedia has provided a handy overhead rate calculator, which you can use to calculate your own...