What are the Benefits of an S Corporation?
The S corporation is a subset of the normal corporation that enjoys some of the benefits of a partnership and some of the benefits of a corporation.
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How Business Ethics Affect Stockholder Equity
Ethical behavior does more than keep individuals and companies out of trouble. It can have a real impact on the bottom line for stockholders.
Continue ReadingWhy is Net Income Not the Same as Cash Flow?
Accounting statements provide an accurate view of an organization at any given point in time. Understanding them requires some special knowledge of …
Continue ReadingHow Improper Corporate Accumulation of Income Affects Shareholders and Investors
Current tax laws do not allow a corporation to accumulate large sums of retained earnings in lieu of distributing dividends. Doing so incurs a tax …
Continue ReadingHow Net Present Value Measures Investor Risk in Financial Decisions
The price of a security can be calculated by taking into account all future cash flows associated with the asset. The Net Present Value also takes …
Continue ReadingHow to Use the Perpetuity Formula to Find the Present Value of a Perpetuity
A perpetuity is a special case in which cash flows are expected to go on forever. Valuing a perpetuity or infinite annuity is useful in estimating …
Continue ReadingThe Tax Effects of Capital Gains and Capital Losses
News articles often discuss the effects of taxes on capital gains when a company sells a long-term investment. Investors must understand the concept …
Continue ReadingExtraordinary Income and its Effects When Valuing a Corporation
When a company sells a significant asset, the proceeds are recorded as extraordinary income on the company’s financial statements. This event has two …
Continue ReadingThe Principle of the Time Value of Money in Financial Markets
Money today is not the same as money tomorrow or even yesterday for that matter. The old adage “time is money” is an important concept in financial …
Continue ReadingHow a Diversified Portfolio Offsets Risk for an Investor
The concept of diversification suggests that putting all of one’s eggs in one’s basket is a risky decision. Spreading investments over multiple, …
Continue ReadingHow Investors Use the Risk Return Trade Off in Competitive Capital Markets
In almost all aspects of life, the largest risks have the largest payoffs. In competitive financial markets, this holds true almost universally. Learn …
Continue ReadingThe Principle of Capital Market Efficiency
Information travels quickly when money is at stake. In capital markets, prices of securities react to information swiftly and efficiently. Learn how …
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