Long-term Stock Investing

Growth investing is an investment strategy that focuses on growing invested capital. Growth investors invest in companies, industries, and sectors that are in the early stages of growth, with tremendous growth potential. The investment strategy is offensive rather than defensive as it entails trying to build a dynamic portfolio and generate more returns on i...

Value investing is a strategy that involves investing in securities that appear to be trading at a discount relative to their intrinsic value. Investors focus their attention on stocks that seem undervalued, considering prevailing market conditions as well as underlying fundamentals. It is common to find potential investments trading at a discount. Stocks of...

Business accounting is a prerequisite for any entrepreneur interested in running a business efficiently. As such, you must understand balance sheets, current assets, and current liabilities. This article explains these aspects of business accounting in detail. What is business accounting? Business accounting entails monitoring a company’s economic even...

The balance sheet is one of the most crucial financial statements for a business, showing the financial position of a company at a given time. As such, this statement is otherwise referred to as the statement of financial position. This article discusses the balance sheet in detail, with emphasis on the various components of the statement.   Components of th...

To run a business efficiently, management must thoroughly understand its financial position. To this end, accountants produce financial statements like balance sheets, cash flow statements, and profit and loss statements. This article focuses on the profit and loss statement. What is a profit and loss statement? This crucial financial tool records the revenu...

Every business starts from some place, and shareholder equity plays a crucial role in the founding process. As such, whatever happens to equity materially affects the running of each business. This article explains the statement of changes in equity and why it is significant to businesses. What is the statement of changes in equity? Business operations vary...

Companies the world over maintain three primary financial statements for making sense of operations. One of those financial statements is the cash flow statement. What is a cash flow statement? During their operations, companies never lift a finger from their financial pulse. Companies face ultimate extinction if they can’t turn a profit from their ope...

Investors watch public companies closely. Every action that such a company takes can have a big influence on the direction of its stock. This article discusses corporate action and the important dates associated with the exercise. What is a corporate action? The Business Dictionary defines corporate action as a situation created by a company that affects its...

Financial analysis describes the evaluation of the economic trends of a business. Usually, the purpose of this exercise is to analyse the financial health of a company.  What is financial analysis? Once a company opens for business, management must meet numerous obligations, including tax payments, dividends, and loan repayments – to name just a few. P...

Price to Earnings (P/E) is a financial metric that measures the attractiveness of a company relative to its current earnings. Also known as price multiple or earnings multiple, the ratio indicates the price that an investor would be paying for $1 of a company’s earnings. Value investors use the metric to determine if the stock of a company is overvalue...

Price to book (P/B) is a financial metric used to compare the value of a company’s net assets relative to the prevailing share price. Market to book ratio is often used to indicate whether a company is fairly valued relative to its net assets or over/undervalued. The P/B ratio compares a company’s market capitalization to its share price. The met...

In a stock market, not all stocks are the same. Therefore if you want to invest in stocks, you may want to select the right stocks that align with your investment goals. In choosing the best stocks to buy, investors typically look at certain metrics to better understand a stock. Market capitalisation is one of those metrics investors commonly use to evaluate...

Return on Equity is a financial metric used to ascertain how effective management is in using underlying assets to create profits and value. Investors rely on the ratio to measure how efficiently management uses the money contributed. Simply put, it is a measure of a company’s profitability relative to stockholders’ equity. Return on Equity Calcu...

Return on Assets (ROA) is the amount of money a company earns or the profit it generates from the assets it has invested. It is basically how a company’s assets are profitable in generating revenue. The total income of a company in a given period is divided by the average total assets in the same period, and the return on assets is determined. The Retu...

Return On Invested Capital (ROIC) represents the earnings that a company gets from the capital it has invested. It is a profitability ratio that measures the returns that investors are receiving back after investing in the company’s capital. In this case, the capital here includes the total amount of long-term debt and the total amount of shares, both...

Debt to income ratio is a personal finance measure that seeks to compare the amount of consumers’ monthly income that goes towards the payment of debts, taxes, and fees or insurance premiums. Lenders rely on this metric to ascertain whether borrowers would be able to repay an amount they wish to borrow. Debt To Net Income Calculation Debt to net income...

Corporations have many pressing needs, and increasing shareholder value in the short term is one of them. What happens when revenue growth and earnings growth are not enough to achieve that objective? These corporations might resort to share buybacks. This article explains share buybacks in detail. Share buybacks, also called stock buybacks or share repurcha...

Enterprise value to earnings before interest and taxes (EV/EBIT) is a financial metric used to ascertain how a stock or asset is valued relative to the overall industry. In most cases, analysts use the metric to determine if an underlying stock is priced too high or too low relative to other stocks in the same sector. While similar to Price to Earnings ratio...

Congratulations! You’ve just read every lesson in our Stock Investing course… hats off to you! By finishing this course, your investing knowledge has grown significantly. In addition to the beginner’s lessons you learned in our Stock Markets 101 course, you’ve progressed to become fluent in breaking down key company financials. By knowing what to look...