Free Cash Flow Yield
What is free cash flow yield and why is it important Free cash flow yield (FCF) is a measure of a company's financial performance, calculated as operating cash flow minus capital expenditures. FCF yield is simply the FCF divided by the market value of the stock. Why is this ratio important? Because it tells us how much cash flow the...
Bull Spreads – How to Trade Bull Spreads
A bull spread is a vertical spread options strategy that profits from a moderate increase in the price of an underlying security. The bull spread is a great way to trade options that can be profitable even if you're new to the market. Here are some tips on trading bull spreads. Read on to learn more! This article will...
Menu Costs
What are menu costs? Menu costs are a type of transaction cost incurred by firms when they change their prices. Menu costs are one microeconomic explanation offered by New Keynesian economists for macroeconomic price-stickiness, which may cause an economy to fail to adjust to changing macroeconomic conditions. What are the different types of menu costs? There are two main types of menu...
Money Factor
What is a money factor and what does it mean for your lease payments Money factor is a term used in the auto leasing industry that refers to the interest rate on your lease. In order to calculate your monthly payments, the dealership will take the money factor and multiply it by the total price of the vehicle. The higher...
What Is Restricted Cash?
Restricted cash is a component of the "cash and cash equivalents" account There are several types of investments that may be accounted for in a cash and money market account. These types of investments are highly liquid and are readily convertible to cash, although they have a relatively low risk of change in value due to interest rates. Listed below...
What is a Dormant Account?
A dormant account is an inactive account that has been left untouched by its owner for a year. After this time, it can be claimed by the account owner or a beneficiary. They will have to pay a maintenance fee. The financial institution may charge a fee to maintain the account, but this fee is nominal. A dormant account...
Sec Yield
What is sec yield Before discussing what sec yield is, let's review some basics. A bond is a debt investment in which an investor loans money to an entity (usually governmental) for a defined period of time. The entity pays the investor periodic interest payments, called coupons, and returns the loan amount at maturity. The periodic interest payments are a...
Economic Moats
An economic moat is a strategic advantage that a company has over its competitors. It is often attributed to investor Warren Buffett. The economic moat is similar to a castle's moat, in that certain advantages protect a company from its competitors. In this article, we will cover Intangible assets, Efficiency of scale, Patents, and Switching costs. These are all...
Outstanding Check
What is an outstanding check and what are the consequences of not paying it back An outstanding check is a check that has been written but not yet cashed by the recipient. There are a few reasons why this might happen, such as the recipient losing the check or simply forgetting to deposit it. Outstanding checks can cause problems for...
Inverse Correlation Explained
Inverse correlation is a type of relationship between two variables. The term refers to the fact that higher values of one variable are correlated with lower values of the other. The reverse of this relationship is also known as negative correlation. It is one of the strongest forms of correlation, and is commonly used to describe a relationship between...