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Bond Valuation – Basic Principles

By Reading Time: 7 mins
Updated

Bond Valuation

Bond valuation is made on the basis of principle that works behind valuation of direct claim securities. The principle is that a bond value is derived from the associated cash flows it generates e.g. coupon receipt and par recovery at maturity. So the bond valuation is directly associated with the value of securing real assets of the company. The operations of the company generate cash inflows from sale of its products. Hence the income of bonds is actually linked with the income of the business that is generated from working on real assets.

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Difference between Bonds and Shares

By Reading Time: 4 mins
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Bonds and Shares

A question that people probably ask what is the difference between bonds and shares. If you have a little bit knowledge about bonds and shares, you may easily respond to this question! Difference between bonds and shares is that stocks are shares in the ownership, while bonds are a form of debt that’s to be repaid in future.

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Working Capital Management

By Reading Time: 10 mins
Updated

Working Capital

It is an important aspect of Business Organization, and it is all about the working capital management that company easily meets the day to day expenses of business. Before going in depth of working capital management, we should know about the working capital. The term “working capital” can be described in two further ways. Gross working capital (Current Assets) and net working capital (Current Assets – Current Liabilities)

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Operating Leverage Formula and Application

By Reading Time: 4 mins
Updated

Operating Leverage Formula

The effect of little change in the sales on the returns on equity. It means that the small decline in the sales results in the large decline in the ROE (in case the sales are below breakeven point). The operating leverage formula is: Operating Leverage (OL) = Fixed Costs / Total Costs

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Dividend Theories – Payout | Residual Dividend Model

By Reading Time: 4 mins
Updated

Dividend and Dividend Payout

Before talking about dividend payout theories, let’s talk about the first dividend and the dividend payout. Dividend is a part of profit which is distributed among the shareholders. Where dividend payout is related to the policy of a company that specifies the quantity of net income. That paying in the form of dividends to the shareholders.

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