Capital asset pricing model is a widely used technique to calculate the expected rate of return for equity investment. It considers the beta or systematic risk, expected market return and risk free rate to calculate the expected rate of return on equity investment. E(R) = RFR + β [E(Rm) –RFR] Where, E(R) = Expected rate […]Continue Reading... No Comments.
There are lots of methods available to the analysts to calculate the cost of equity. Among them, 2 methods are used most widely which are Discounted Cash Flow (DCF) approach Capital Asset Pricing Model (CAPM) Discounted Cash Flow (DCF) approach is further divided into two methods depending on the growth of the company. These methods […]Continue Reading... No Comments.
Different components of capital, which the companies use to raise money from the market, are specified below… Retained earnings New Equity Capital Preference Share Capital Long term debt Different methods are followed to calculate the cost of each type of capital… The details are explained in subsequent posts.Continue Reading... No Comments.
Working capital management refers to the decisions and managing the working capital during the normal course of business operational activities. This involves managing the relationship between a company’s current assets and current liabilities. The main aim of Working capital management is to ensure that the company utilizes the working capital properly and generates sufficient cash […]Continue Reading... No Comments.