FCFF and FCFE Ratios
Other cash flow measures such as free cash flow to the firm, and free cash flow to equity, can also be instrumental in the valuation of a company and its equity securities. Generally speaking, free cash flow refers to the…
Value and Price of Forward and Futures Contracts
By assessing the difference between the investors’ determination of the value of a stock or option versus the prevailing market price, investors can either buy or sell the asset to attempt to profit from this discrepancy. However, the same terminology…
Mechanisms to Manage Stakeholder Relationships and Mitigate Associated Risks
In seeking to balance stakeholder interests, a company may employ various mechanisms in stakeholder management. Common mechanisms include: holding general meetings, electing a board of directors, having an audit function, company reporting and transparency, policies on related-party transactions, and remuneration…
Functions and Responsibilities of a Company’s Board of Directors and its Committees
The board of directors oversights company operations and serves as the link between its shareholders and managers. It has the ultimate responsibility of ensuring that the company adopts proper corporate governance principles and complies with all applicable laws and regulations….
Factors That Can Affect Stakeholder Relationships and Corporate Governance
Both market and non-market related factors can affect stakeholder relationships and corporate governance. Market factors are those factors that are related to the capital markets, while non-market factors are those that are not related to the capital markets. Market Factors…
Potential Risks of Poor Corporate Governance
Weaknesses in corporate governance practices and stakeholder management processes expose a company and its stakeholders to several risks. The reverse scenario is that effective corporate governance and stakeholder management practices can create several benefits for a company and its stakeholders….
Factors Relevant to the Analysis of Corporate Governance
There are several factors that analysts consider when assessing a company’s corporate governance structure and stakeholder management. These factors can provide important insights into the quality of management and the sources of potential risk. The factors that analysts look at…
Basic Features of a Fixed-income Security
A fixed-income security is a financial obligation that pays a fixed amount of interest—in the form of coupon payments—to investors at specified points in the future. The payments are anchored on contractual guidelines and must be made. This is, in…
Content of a Bond Indenture
Bond Indenture A bond indenture is a legal document that outlines all the parameters of the bond issue, such as the par amount, issuer, coupon rate, security pledge, and the rights of bondholders. When analyzing a bond, it is important…
