Topic
158 posts tagged “Finance”.
Kurumi · · 5 min read An accretive acquisition raises the buyer's earnings per share; a dilutive one lowers it. How accretion/dilution analysis works and where it misleads.
Kurumi · · 5 min read The cash conversion cycle measures how many days a company's cash is tied up in inventory and receivables before it comes back. How to calculate and read it.
Kurumi · · 5 min read A dual-class share structure gives some shares more votes than others, so founders keep control with a minority stake. How it works and the trade-offs.
Kurumi · · 5 min read Net revenue retention measures how much recurring revenue a company keeps and grows from existing customers over a year. Formula, examples, and NRR vs GRR.
Kurumi · · 5 min read Deferred revenue is cash a company has received for goods or services it has not yet delivered. How it is recorded, recognized, and read by investors.
Kurumi · · 5 min read Operating leverage measures how much a company's operating profit changes when revenue changes, driven by its fixed costs. How it works and why it matters.
Kurumi · · 5 min read WACC blends a company's cost of equity and cost of debt into one discount rate, used to value cash flows and judge whether a project clears its hurdle.
Kurumi · · 4 min read A short squeeze happens when rising prices force short sellers to buy back shares to cover, driving the price up further in a feedback loop.
Kurumi · · 4 min read Pro rata rights let an investor buy enough of a startup's next funding round to keep their ownership percentage from shrinking as new shares are issued.
Kurumi · · 5 min read Carried interest is the share of a fund's profits its managers keep, typically 20%, paid only after investors get their capital back. Here's how it works.
Kurumi · · 5 min read Escrow is a neutral third party that holds money or assets until agreed conditions are met. How it works in real estate, M&A, and startup deals.
Kurumi · · 4 min read A SAFE is a simple agreement for future equity — cash now in exchange for shares later, without setting a valuation or accruing interest like a note.
Kurumi · · 4 min read Goodwill is the premium a buyer pays over a target's net identifiable assets — brand, talent, and customer relationships an acquirer can't itemize.
Kurumi · · 4 min read A golden share is a special class of stock that gives its holder veto power over key corporate decisions, regardless of how small its economic stake is.
Kurumi · · 5 min read ROA measures how efficiently a company turns its total assets into profit, dividing net income by average total assets. How to read it and its limits.
Kurumi · · 5 min read ROIC measures the after-tax return a company earns on all the capital — debt and equity — invested in its operations, a core test of capital efficiency.
Kurumi · · 4 min read A zero-coupon bond pays no periodic interest — it's sold at a discount to face value and pays that full face value at maturity instead.
Kurumi · · 4 min read A bridge loan is short-term financing that covers the gap between an immediate cash need and a longer-term source of funds, at a higher interest rate.
Kurumi · · 4 min read A leveraged loan is a floating-rate loan to a company that already carries significant debt or a below-investment-grade credit rating, priced accordingly.
Kurumi · · 4 min read A clawback provision lets a company reclaim already-paid compensation or equity when specific conditions, like fraud or a restatement, are triggered.
Kurumi · · 5 min read A call option is the right to buy a stock at a set price; a put option is the right to sell at a set price. How each works, and what buyers and sellers risk.
Kurumi · · 4 min read NPV discounts future cash flows to today's dollars at a chosen rate; IRR finds the rate that makes NPV zero. Here's when the two methods disagree.
Kurumi · · 5 min read A HELOC is a revolving credit line secured by home equity, with a draw period for borrowing and a separate repayment period that follows it.
Kurumi · · 5 min read Inflation is the rate at which prices rise and purchasing power falls over time, typically measured by the Consumer Price Index. How CPI is calculated.
Kurumi · · 4 min read A reverse merger lets a private company go public by merging into an existing public shell company, skipping a traditional IPO. How the deal works.
Kurumi · · 4 min read Factor investing targets specific, historically persistent drivers of stock returns — value, size, momentum, quality — instead of picking individual names.
Kurumi · · 4 min read Fundamental analysis values a company from its financials; technical analysis reads price charts for patterns. How each approach works, and when to use them.
Kurumi · · 4 min read Sum-of-the-parts valuation values each business segment of a diversified company separately, then adds them up — often revealing value a single blended multiple misses.
Kurumi · · 4 min read FIFO and LIFO decide which inventory costs hit the income statement first, changing reported profit and taxes without changing a single unit sold.
Kurumi · · 5 min read The efficient market hypothesis holds that asset prices already reflect available information, making it hard to consistently beat the market by picking stocks.
Kurumi · · 5 min read QSBS lets founders and early employees exclude a large share of capital gains from federal tax when they sell qualifying startup stock. How it works.
Kurumi · · 4 min read A special dividend is a one-time cash payout to shareholders, separate from a company's regular dividend. Why companies pay them and how they affect the stock price.
Kurumi · · 5 min read A convertible bond pays interest like ordinary debt but lets the holder exchange it for a fixed number of shares — trading some yield for upside if the stock rallies.
Kurumi · · 4 min read A market circuit breaker is an automatic trading halt triggered when an index falls a set percentage, giving markets a pause during extreme volatility.
Kurumi · · 4 min read A green bond is debt whose proceeds are earmarked for environmentally beneficial projects. How it works and how it differs from a regular bond.
Kurumi · · 4 min read An earnout is a deal structure where part of an acquisition's price is paid later, contingent on the acquired company hitting agreed targets.
Kurumi · · 4 min read A 403(b) is a tax-advantaged retirement plan for public school, nonprofit, and religious-sector employees. How it compares to a 401(k).
Kurumi · · 5 min read A proxy statement (DEF 14A) is the SEC filing that discloses executive pay, board nominees, and shareholder votes ahead of a company's annual meeting.
Kurumi · · 4 min read FDIC insurance protects up to $250,000 per depositor, per bank, per ownership category if an insured bank fails. How the coverage actually works.
Kurumi · · 4 min read A 1031 exchange lets an investor defer capital gains tax on real estate by rolling proceeds into a like-kind property instead of cashing out.
Kurumi · · 4 min read Liquidity is how easily an asset can be bought or sold without moving its price. High-liquidity markets have tight spreads; low-liquidity ones don't.
Chisato · · 4 min read FinOps is the practice of making engineering, finance, and business teams jointly accountable for cloud spend. How it works and what it actually changes.
Kurumi · · 4 min read A unicorn is a privately held startup valued at $1 billion or more, based on its most recent funding round — not its revenue or profit.
Kurumi · · 5 min read A DCF values a company by projecting its future free cash flows and discounting them to present value — the core method behind most valuations.
Kurumi · · 3 min read A blue chip stock is shares in a large, well-established, financially sound company with a long record of stable performance and often a dividend.
Kurumi · · 4 min read A bond covenant is a contractual promise a borrower makes to bondholders — a rule that protects lenders by restricting what the issuer can do.
Kurumi · · 5 min read An 83(b) election lets you pay tax on restricted stock at grant instead of at vesting, locking in a low valuation while the risk is high.
Kurumi · · 4 min read Treasury stock is a company's own shares it has repurchased and holds rather than retired, recorded as a contra-equity line that reduces shareholders' equity.
Kurumi · · 4 min read An IPO lock-up period bars insiders and early investors from selling shares for a set window after the offering, usually 90 to 180 days.
Kurumi · · 5 min read A stock split multiplies shares outstanding and lowers the price per share; a reverse split does the opposite. Neither changes what the company is worth.
Kurumi · · 4 min read Preferred stock pays fixed dividends and ranks above common stock in a liquidation, but usually gives up voting rights and upside. Here's the tradeoff.
Kurumi · · 4 min read Alpha measures return in excess of what a portfolio's risk level predicts; beta measures that risk itself. Together they separate skill from market exposure.
Kurumi · · 4 min read The debt-to-equity ratio compares a company's total liabilities to shareholder equity to gauge financial leverage. How to read it.
Kurumi · · 4 min read Burn rate is how fast a startup spends cash; runway is how long its cash lasts at that rate. How the two numbers are calculated and why they matter.
Kurumi · · 5 min read ISOs get preferential tax treatment but only for employees under strict limits; NSOs are simpler and more flexible but taxed as ordinary income at exercise.
Kurumi · · 4 min read A dark pool is a private venue where buy and sell orders are matched without being shown publicly beforehand. Why they exist and who actually uses them.
Kurumi · · 4 min read A repurchase agreement, or repo, is a short-term loan collateralized by securities — the plumbing behind overnight cash markets.
Kurumi · · 4 min read A direct listing lets a company's existing shares start trading publicly without issuing new stock or using underwriters to set the price.
Kurumi · · 4 min read An expense ratio is the annual percentage of a fund's assets taken out to cover management costs — how it's calculated and why it compounds over decades.
Kurumi · · 5 min read A down round is a funding round priced below a startup's prior valuation, diluting existing shareholders and resetting terms.
Kurumi · · 4 min read Venture debt is a loan for VC-backed startups that adds runway without diluting equity, usually paired with a recent funding round.
Kurumi · · 5 min read A liquidation preference sets who gets paid first, and how much, when a startup is sold — often the term that most shapes investor and founder payouts.
Kurumi · · 5 min read A term sheet outlines a proposed investment's key terms — valuation, ownership, control — before lawyers draft the binding legal agreements.
Kurumi · · 4 min read A cap table is the ledger of who owns what percentage of a company. How it tracks founders, investors, and options, and why it gets messy fast.
Kurumi · · 4 min read A 409A valuation sets the fair market value of a private company's common stock, setting the strike price for employee stock options. How it works.
Kurumi · · 4 min read Shares outstanding is every share a company has issued; public float is the subset actually available to trade. Why the gap moves stock prices.
Kurumi · · 4 min read The current ratio and quick ratio both measure short-term liquidity, but the quick ratio excludes inventory. How to read and compare them.
Kurumi · · 4 min read An annuity is a contract with an insurer that converts a lump sum into a stream of payments, often for life. How the main types differ.
Kurumi · · 4 min read A greenshoe option lets IPO underwriters sell up to 15% more shares than planned, giving them a tool to stabilize the stock price after listing.
Kurumi · · 4 min read A robo-advisor builds and rebalances a diversified portfolio automatically based on your risk profile, usually for lower fees than a human advisor.
Kurumi · · 4 min read An accredited investor meets income, net-worth, or professional thresholds that unlock access to private placements, hedge funds, and venture deals.
Kurumi · · 4 min read Insider trading means trading on material, nonpublic information. Some of it is legal and disclosed; trading on secret information to gain an edge is not.
Kurumi · · 5 min read An ESPP lets employees buy company stock through payroll deductions, often at a discount — here's how the mechanics and the tax treatment work.
Kurumi · · 4 min read Book value is a company's total assets minus total liabilities — its net worth on the balance sheet. How it's calculated and where it falls short.
Kurumi · · 4 min read The bid-ask spread is the gap between the highest price buyers will pay and the lowest price sellers will accept. What sets its width and why it matters.
Kurumi · · 4 min read Portfolio rebalancing sells winners and buys laggards to restore target allocations, keeping risk in check as markets move holdings out of line.
Kurumi · · 4 min read A golden cross is a short-term moving average crossing above a long-term one, seen as bullish; a death cross is the same crossover in reverse, seen as bearish.
Kurumi · · 4 min read A tender offer is a public bid to buy shares directly from shareholders at a set price, bypassing the board — often used in takeovers and buybacks.
Kurumi · · 4 min read A leveraged ETF uses swaps and futures to deliver a multiple of an index's daily return — and daily resets mean long-term returns can diverge sharply.
Kurumi · · 4 min read Return on equity measures how much profit a company generates for every dollar of shareholder equity, a core gauge of how efficiently it's run.
Kurumi · · 4 min read A credit rating is a letter-grade opinion on how likely a borrower is to repay debt, set by agencies like S&P, Moody's, and Fitch.
Kurumi · · 4 min read Arbitrage is profiting from a price gap for the same asset in different markets, buying low and selling high nearly simultaneously with minimal risk.
Kurumi · · 4 min read A DRIP automatically reinvests cash dividends into more shares, often commission-free, compounding returns without a manual trade each time.
Kurumi · · 4 min read The PEG ratio divides a stock's P/E by its expected earnings growth rate, giving a quick read on whether a high multiple is actually justified.
Kurumi · · 4 min read A bond's coupon rate is fixed at issuance; yield to maturity reflects its current price and time to maturity. How the two diverge and why it matters.
Kurumi · · 4 min read A target-date fund is a single fund that shifts from stocks to bonds automatically as a chosen year approaches, following a preset glide path.
Kurumi · · 4 min read Diversification spreads money across uncorrelated holdings so no single loss sinks a portfolio — it cuts risk without necessarily cutting return.
Kurumi · · 4 min read Asset allocation is how a portfolio is split across stocks, bonds, and cash — the mix that drives most of a portfolio's long-run risk and return.
Kurumi · · 5 min read A rights offering lets existing shareholders buy new shares at a discount before anyone else, raising capital while giving current investors first refusal.
Kurumi · · 4 min read A golden parachute is a contract guaranteeing an executive a large payout if they're terminated after a merger or takeover, even without cause.
Kurumi · · 4 min read A bull market is a sustained rise in prices; a bear market is a sustained decline, conventionally defined as a 20% drop from a recent high.
Kurumi · · 4 min read A callable bond lets the issuer repay the principal early, before maturity. It pays a higher yield than a comparable bond to compensate for that risk.
Kurumi · · 4 min read The price-to-book ratio compares a company's market price to its net asset value on the balance sheet, a classic value-investing screen. How it's calculated, and where it misleads.
Kurumi · · 5 min read The income statement, balance sheet, and cash flow statement each answer a different question about a company. How they connect and what each one shows.
Kurumi · · 4 min read Cost basis is what you paid for an investment, adjusted for fees and reinvested dividends — it's the number capital gains tax is calculated from.
Kurumi · · 4 min read Gross, operating, and net margin each strip out different costs to show profitability at a different layer of the income statement. Here's what each one isolates.
Kurumi · · 4 min read The Rule of 72 estimates how many years it takes an investment to double: divide 72 by the annual return rate. How accurate it is, and its limits.
Kurumi · · 4 min read A stop-loss order automatically sells a security once it falls to a set trigger price, capping downside without watching the market all day.
Kurumi · · 5 min read Buybacks and dividends both return cash to shareholders, but they differ in tax treatment, flexibility, and who benefits. How to compare the two.
Kurumi · · 5 min read Tax-loss harvesting sells losing investments to offset capital gains and up to $3,000 of ordinary income each year, then reinvests the proceeds.
Kurumi · · 4 min read A 10-K is a public company's audited annual report to the SEC; a 10-Q is its unaudited quarterly update. What each contains and when they're filed.
Kurumi · · 4 min read A secondary offering is new or existing stock sold to the public after a company's IPO — how it differs from an IPO, and why it can dilute shareholders.
Kurumi · · 4 min read A Dutch auction starts at a high price and descends until a buyer accepts — used in IPO pricing, treasury auctions, and some token sales.
Kurumi · · 4 min read Treasury bills are short-term government debt sold at a discount to face value, with the difference functioning as the interest paid to the holder.
Kurumi · · 4 min read A moving average smooths out price noise by averaging recent data points over a rolling window. How simple and exponential moving averages work.
Kurumi · · 5 min read Equity dilution is the reduction in existing shareholders' ownership percentage when a company issues new shares. How it happens and what to watch for.
Kurumi · · 4 min read Growth stocks are priced for future earnings expansion; value stocks trade below what their current fundamentals suggest. How to tell the two apart.
Kurumi · · 4 min read A margin call is a broker's demand for more cash or securities after a leveraged position loses value. How maintenance margin works and how it gets triggered.
Kurumi · · 5 min read Working capital is current assets minus current liabilities — a measure of whether a company can cover its near-term bills without raising new cash.
Kurumi · · 5 min read A poison pill lets shareholders buy discounted shares once an acquirer crosses an ownership threshold, diluting that stake to deter hostile takeovers.
Kurumi · · 5 min read A credit default swap is insurance against a bond issuer defaulting: the buyer pays a premium, the seller pays out if the underlying debt fails.
Kurumi · · 4 min read A covered call is an options strategy where you sell a call against stock you already own, collecting premium in exchange for capping your upside.
Kurumi · · 5 min read Beta measures how much a stock moves relative to the overall market — above 1 means more volatile, below 1 means less. How it's calculated and its limits.
Kurumi · · 4 min read A stock warrant gives the holder the right to buy shares directly from the company at a set price before expiration — issued by the company, not traded exchanges.
Kurumi · · 4 min read The Sharpe ratio measures return earned per unit of risk taken, letting investors compare two investments with different volatility on equal footing.
Kurumi · · 4 min read Depreciation spreads a tangible asset's cost over its useful life; amortization does the same for intangible assets and loan balances. How each works.
Kurumi · · 4 min read A 10-K is a public company's audited annual report to regulators, covering financials, risk factors, and management discussion in far more detail than a press release.
Kurumi · · 4 min read EPS divides net income by outstanding shares to show profit per share. How basic and diluted EPS differ, and why EPS alone can mislead.
Kurumi · · 5 min read A money market fund is a mutual fund that holds short-term, high-quality debt to preserve cash while paying interest. How it works and its risks.
Kurumi · · 4 min read A Health Savings Account (HSA) is a triple-tax-advantaged account for medical expenses, paired with a high-deductible health plan. How HSAs work.
Kurumi · · 4 min read Index funds and ETFs can track the same index, but they differ in how they trade, their minimums, and their tax treatment. Here's how to choose between them.
Kurumi · · 5 min read A sinking fund sets aside money on a regular schedule to pay off a future debt or expense, reducing default risk and smoothing out a large future cost.
Kurumi · · 5 min read Bond duration measures how much a bond's price moves when interest rates change, expressed in years. Higher duration means more interest-rate risk.
Kurumi · · 4 min read A REIT is a company that owns income-producing real estate and must pay out most of its taxable income as dividends, letting investors buy in like a stock.
Kurumi · · 4 min read A 529 plan is a tax-advantaged investment account for education costs — contributions grow tax-free and qualified withdrawals aren't taxed at all.
Kurumi · · 4 min read A CD locks up cash for a fixed term in exchange for a fixed interest rate, usually higher than a savings account. How CDs work and their trade-offs.
Kurumi · · 4 min read Market cap prices the equity alone; enterprise value adds debt and subtracts cash to price the whole business. How to use each correctly.
Kurumi · · 4 min read A 401(k) is an employer-sponsored retirement account with pre-tax or Roth contributions, tax-advantaged growth, and often a matching contribution.
Kurumi · · 4 min read A bond ladder splits an investment across bonds with staggered maturities, reducing interest-rate risk while keeping cash flowing back at regular intervals.
Kurumi · · 4 min read A Roth IRA taxes contributions upfront and grows tax-free; a traditional IRA defers tax until withdrawal. How the two account types compare.
Kurumi · · 4 min read A yield curve plots bond yields against their maturities, and its shape signals what investors expect about growth, inflation, and interest rates.
Kurumi · · 4 min read A stock index tracks a basket of stocks with a single number, using a construction methodology that determines what moves it. Here's how it works.
Kurumi · · 4 min read A market order executes immediately at the best price; a limit order waits for your price or better. How each works and when to use them.
Kurumi · · 4 min read Compound interest earns returns on both your original principal and previously earned interest, causing growth to accelerate rather than stay flat.
Kurumi · · 4 min read A leveraged buyout uses borrowed money, secured against the target company's own assets, to fund most of an acquisition's purchase price.
Kurumi · · 4 min read An economic moat is a durable competitive advantage that protects a company's profits from competitors over the long run. The main types, explained.
Kurumi · · 5 min read EBITDA strips out interest, taxes, depreciation, and amortization to show core operating profit. How it's calculated, why investors use it, and its limits.
Kurumi · · 4 min read A hedge fund is a pooled investment vehicle for accredited investors that uses leverage, derivatives, and short selling to chase absolute returns.
Kurumi · · 4 min read A SAFE is a startup funding contract that converts an investor's cash into equity at a future priced round, without interest or a maturity date.
Kurumi · · 4 min read A convertible note is short-term debt that converts to equity at a future funding round — how it works and how it differs from a SAFE.
Kurumi · · 3 min read A mutual fund pools money from many investors into one managed portfolio. How mutual funds work, their fees, and how they compare to ETFs.
Kurumi · · 3 min read An IPO is when a private company sells shares to the public for the first time and lists on an exchange. How the process works, and what changes after.
Kurumi · · 5 min read Free cash flow is the cash a company generates after covering the capital spending needed to run its business. Why investors weight it over reported profit.
Kurumi · · 4 min read An options contract gives the holder the right, not the obligation, to buy or sell a stock at a set price by a set date. Calls and puts explained.
Kurumi · · 4 min read RSUs grant actual shares on vesting, while stock options grant the right to buy shares at a fixed price. How the two forms of equity compensation differ.
Kurumi · · 4 min read Short selling means borrowing shares to sell now, hoping to buy them back cheaper later — a bet on a falling price with theoretically unlimited risk.
Kurumi · · 5 min read A market maker quotes buy and sell prices continuously, profiting from the spread while providing the liquidity that keeps markets tradeable.
Kurumi · · 5 min read A SPAC is a shell company that raises money in an IPO, then merges with a private company to take it public without a traditional IPO process.
Kurumi · · 4 min read A dividend is a portion of a company's profit paid directly to shareholders, typically in cash per share. How payouts, yield, and reinvestment work.
Kurumi · · 4 min read Vesting is the schedule by which an employee earns full ownership of granted equity over time. How cliffs, vesting periods, and acceleration work.
Kurumi · · 4 min read A bond is a loan you make to a government or company in exchange for regular interest and repayment of principal at maturity. How pricing and yield work.
Kurumi · · 4 min read Startup funding rounds move from pre-seed through Series C and beyond, each trading equity for capital at a higher valuation. How each stage works.
Kurumi · · 5 min read Dollar-cost averaging means investing a fixed amount on a regular schedule regardless of price. How it works, and its real tradeoffs versus lump sum.
Kurumi · · 4 min read An ETF is a basket of securities that trades on an exchange like a stock. How creation and redemption work, and how ETFs differ from mutual funds.
Kurumi · · 4 min read A stock split increases a company's share count and lowers its price proportionally, leaving total market value and each investor's stake unchanged.
Kurumi · · 5 min read Market cap is share price times shares outstanding — the market's total price tag on a company. What it measures, what it misses, and why it matters.
Kurumi · · 4 min read A stock buyback is a company using cash to repurchase its own shares, shrinking the share count. How buybacks work, why firms do them, and the trade-offs.
Kurumi · · 5 min read The P/E ratio divides a stock's price by its earnings per share — a quick gauge of how much investors pay per dollar of profit. How to read it and its limits.
