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Adjusted Present Value (APV)
Adjusted Present Value (APV)What is APV? The Adjusted Present Value (APV) is defined as the sum of the present value of a project assuming solely equity financing and the PV of all financing-related benefits.
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Annual Percentage Rate (APR)
Annual Percentage Rate (APR)What is APR? The Annual Percentage Rate (APR) is the interest rate charged by a lender on a yearly basis, expressed in the form of a percentage.
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Annual Percentage Yield (APY)
Annual Percentage Yield (APY)What is APY? The Annual Percentage Yield (APY) calculates the interest rate earned on a deposit or investment while incorporating the effects of compound interest.
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Annuity
AnnuityWhat is Annuity? An Annuity is a type of bond that offers a stream of periodic interest payments to the holder until the date of maturity.
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Bond Yield
Bond YieldWhat is Bond Yield? Bond Yield metrics collectively measure the return expected to be received by a bondholder from the date of original issuance until maturity.
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Callable Bond
Callable BondWhat is a Callable Bond? A Callable Bond contains an embedded call provision, in which the issuer can redeem a portion (or all) of the bonds prior to the stated maturity date.
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Capital Structure
Capital StructureWhat is Capital Structure? The Capital Structure refers to the mixture of debt, preferred stock, and common equity used by a company to fund operations and purchase assets.
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Compound Interest
Compound InterestWhat is Compound Interest? Compound Interest is the incremental interest earned on the original principal (or deposit amount) and the accrued interest from prior periods.
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Current Yield
Current YieldWhat is Current Yield? The Current Yield measures the expected annual return of a bond and is calculated by dividing the annual coupon by the current market price.
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Discounted Payback Period
Discounted Payback PeriodWhat is the Discounted Payback Period? The Discounted Payback Period estimates the time needed for a project to generate enough cash flows to break even and become profitable.
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Dividend
DividendWhat is a Dividend? A Dividend is the distribution of a company’s after-tax profits to its shareholders, either periodically or as a special one-time issuance.
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Future Value (FV)
Future Value (FV)What is Future Value? The Future Value (FV) refers to the implied value of an asset as of a specific date in the future based upon a growth rate assumption.
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Implied Dividend Growth Rate
Implied Dividend Growth RateWhat is the Implied Dividend Growth Rate? The Implied Dividend Growth Rate can be derived from rearranging the dividend discount model formula.
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Internal Growth Rate (IGR)
Internal Growth Rate (IGR)What is Internal Growth Rate? The Internal Growth Rate (IGR) estimates the maximum rate that a company could grow using solely its retained earnings without external financing.
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Make-Whole Call Provision
Make-Whole Call ProvisionWhat is the Make-Whole Call Provision? A Make-Whole Call Provision stipulates that the borrower has the contractual right to redeem a debt obligation prior to the original maturity date.
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Net Capital Spending
Net Capital SpendingWhat is Net Capital Spending? Net Capital Spending (NCS) measures the difference between a company’s capital expenditures and depreciation in a given period.
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Net Present Value (NPV)
Net Present Value (NPV)What is NPV? Net Present Value (NPV) refers to the difference between the present value (PV) of a future stream of cash inflows and outflows. In practice, NPV is widely used to determine the perceived...
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Par Value
Par ValueWhat is Par Value? The Par Value is the face value (FV) on the issuance of securities like bonds or stocks, as established on the issuer’s security certificate.
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Payback Period
Payback PeriodWhat is Payback Period? The Payback Period measures the amount of time required to recoup the cost of an initial investment via the cash flows generated by the investment.
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Perpetuity
PerpetuityWhat is Perpetuity? A Perpetuity refers to a constant stream of cash flows payments anticipated to continue indefinitely.
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Present Value (PV)
Present Value (PV)What is Present Value? The Present Value (PV) is an estimation of how much a future cash flow (or stream of cash flows) is worth right now. All future cash flows must be discounted to the present usin...
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Present Value of Growth Opportunities (PVGO)
Present Value of Growth Opportunities (PVGO)What is PVGO? PVGO, or “present value of growth opportunities”, estimates the portion of a company’s share price attributable to expectations of future earnings growth.
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Profitability Index (PI)
Profitability Index (PI)What is Profitability Index? The Profitability Index (PI) is the ratio between the present value of cash inflows and the present value of cash outflows.
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Recapitalization
RecapitalizationWhat is Recapitalization? Recapitalization is a catch-all term referring to measures taken by companies to adjust the debt-to-equity (D/E) mixture within their capital structures.
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Simple Interest
Simple InterestWhat is Simple Interest? Simple Interest refers to a interest rate pricing structure in which the amount of interest owed is based only on the original principal value.
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Stakeholders
StakeholdersWhat are Stakeholders? Stakeholders describe any party, either internal and external, with a vested interest in a corporation such as the management team, shareholders, suppliers and creditors. The de...
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Stock Buyback
Stock BuybackWhat is a Stock Buyback? A Stock Buyback occurs when a company decides to repurchase its own previously issued shares either directly in the open markets or via a tender offer.
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Sustainable Growth Rate (SGR)
Sustainable Growth Rate (SGR)What is Sustainable Growth Rate? The Sustainable Growth Rate (SGR) is the approximate rate at which a company could grow if its current capital structure – i.e. the mixture of debt and equity – is mai...
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Time Value of Money (TVM)
Time Value of Money (TVM)What is the Time Value of Money? The Time Value of Money is a core principle of valuation that states that money as of the present date carries more value than the same amount received in the future.
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Yield to Call (YTC)
Yield to Call (YTC)What is Yield to Call? Yield to Call (YTC) is the expected return on a callable bond, assuming the bondholder redeemed the bond on the earliest call date before maturity.
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Yield to Maturity (YTM)
Yield to Maturity (YTM)What is Yield to Maturity? The Yield to Maturity (YTM) represents the expected annual rate of return earned on a bond under the assumption that the debt security is held until maturity. From the persp...
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Yield to Worst (YTW)
Yield to Worst (YTW)What is Yield to Worst? Yield to Worst (YTW) is the minimum return received on a callable bond, i.e. the “floor yield”, aside from the yield if the issuer were to default.
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Zero Coupon Bond
Zero Coupon BondWhat is a Zero Coupon Bond? A Zero Coupon Bond is priced at a discount to its face (par) value with no periodic interest payments from the date of issuance until maturity.