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what is the sum of the parts valuation sotp | the sum of the parts valuation sotp is a process of valuing a company by determining what its aggregate divisions would be worth if they were spun off or acquired by another company the valuation provides a range of values for a company s equity by aggregating the standalone value of each of its business units and arri... | |
how to calculate sum of the parts valuation sotp | the value of each business unit or segment is derived separately and can be determined by any number of analysis methods for example discounted cash flow dcf valuations asset based valuations and multiples valuations using revenue operating profit or profit margins are methods utilized to value a business segment | |
what does the sotp tell you | sum of the parts valuation also known as breakup value analysis helps a company understand its true value for example you might hear that a young technology company is worth more than the sum of its parts meaning the value of the company s divisions could be worth more if they were sold to other companies in situations... | |
what is the sum of the parts valuation sotp | the sum of the parts valuation sotp is a process of valuing a company by determining what its aggregate divisions would be worth if they were spun off or acquired by another company the valuation provides a range of values for a company s equity by aggregating the standalone value of each of its business units and arri... | |
how to calculate sum of the parts valuation sotp | the value of each business unit or segment is derived separately and can be determined by any number of analysis methods for example discounted cash flow dcf valuations asset based valuations and multiples valuations using revenue operating profit or profit margins are methods utilized to value a business segment | |
what does the sotp tell you | sum of the parts valuation also known as breakup value analysis helps a company understand its true value for example you might hear that a young technology company is worth more than the sum of its parts meaning the value of the company s divisions could be worth more if they were sold to other companies in situations... | |
what is a sunk cost | a sunk cost is an expense that cannot be recovered by additional spending or investment businesses should be careful to exclude sunk costs from future decisions because they will remain the same regardless of the outcome of those decisions | |
when a business or investor spends more money trying to reverse past losses they risk succumbing to the sunk cost fallacy the expression don t send good money chasing after bad money is a caution against this type of mistake | investopedia sydney saporitounderstanding sunk costsa sunk cost refers to money that has already been spent and cannot be recovered a manufacturing firm for example may have a number of sunk costs such as the cost of machinery equipment and the lease expense on the factory sunk costs are excluded from a sell or process... | |
when making business decisions organizations should only consider relevant costs which include the future costs that still needed to be incurred the relevant costs are contrasted with the potential revenue of one choice compared to another to make an informed decision a business only considers the costs and revenue tha... | businesses that continue a course of action because of the time or money already committed to an earlier decision risk falling into the sunk cost trap types of sunk costsall sunk costs are fixed costs but not all fixed costs are sunk costs the difference is that sunk costs cannot be recovered if equipment can be resold... | |
how to avoid the sunk cost fallacy | the sunk cost fallacy can easily be overcome with mindfulness dedicate and thoughtful planning here s a few pointers on overcoming the mental challenge after trading for joey gallo the new york yankees outfielder struck out 194 times over 140 games instead of continuing to stick with their decision that didn t pan out ... | |
what is an example of a sunk cost | imagine a company decides it needs to expand its warehouse it contacts an architect to design a new space who drafts some preliminary drawings for a fee then an economy slowdown occurs and the company is now unsure whether it should continue with the new warehouse in this example the architecture fees are an example of... | |
are salaries a sunk cost | yes any salary that has been paid to an employee is a sunk cost as long as those wages are not recoverable that salary represents an expense that has been incurred and can not be captured back by the company | |
what is a sunk cost vs a fixed cost | in business fixed costs are expenses that have to be paid by a company independent of any specific work activities they don t apply to a company s production of any goods or services and they don t rise or fall with a change in the number of goods or services produced or sold sunk costs are a subset of fixed costs spec... | |
why are sunk costs important | sunk costs are important because may act as distractors in decision making when a company analyzes costs and benefits sunk costs should have no bearing on the decision making process as the sunk cost will be incurred regardless of the outcome of the choice sunk costs are important to be mindful of because incorrectly i... | |
what is superannuation | a superannuation is an australian pension program created by a company to benefit its employees funds deposited in a superannuation account will grow through appreciation and contributions until retirement the term super is more commonly used when referring to pension plans available in australia the u s equivalents to... | |
what do you mean by superannuation | superannuation is an australian retirement account there are two types one that can appreciate over time and has variable payouts depending on market conditions and one that has a defined benefit payout system that is not susceptible to market fluctuations | |
what is the difference between superannuation and retirement | superannuation is a retirement account that australians can use to fund their retirement retirement is when you have built enough wealth that you don t need to work again | |
what is superannuation in salary | superannuation is a retirement fund offered by an employer in australia you and your employer contribute to this fund to help you build enough wealth to fund your retirement the bottom linea superannuation is an employer sponsored retirement account used in australia there are two versions the first is similar to defin... | |
what is a supplemental executive retirement plan serp | a supplemental executive retirement plan serp is a set of benefits that may be made available to top level employees in addition to those covered in the company s standard retirement savings plan a serp is a form of a deferred compensation plan it is not a qualified retirement plan that is there is no special tax treat... | |
when a cash value life insurance policy is used to fund the benefits the company benefits from tax deferred accumulation inside the policy in most cases the policy can be structured in a way that allows the company to recover its costs | for executives the plan can be tailored to meet specific needs the benefits accrue to the executive without any current tax consequences | |
when funded with a cash value life insurance policy death benefits are available to provide a continued periodic payment or a lump sum payment to the family in the event of the executive s death depending on the details of the policy these benefits can support a surviving spouse and potentially the executive s dependen... | disadvantages of a serp | |
when funding a serp the company does not receive an immediate tax deduction because the plan is unqualified | unlike with qualified plans which are protected from creditors by federal law the funds that accumulate for a serp inside a life insurance policy are not protected from creditor claims against the company in case of the company s bankruptcy | |
what happens to my serp if i quit | if you leave your job what happens to your supplemental executive retirement plan serp depends on the conditions set in your agreement with the company if your serp was based on a vesting structure and you part ways with your employer before you are fully vested then the assets you are not vested in are not yours there... | |
how is a serp paid out | a supplemental executive retirement plan serp is typically paid out either as a lump sum payment or as an annuity a lump sum arrives all at once which may have the impact of raising your income into a higher tax bracket an annuity is deposited over time periodically in a set schedule consider consulting with a financia... | |
what is supply | supply is a fundamental economic concept that describes the total amount of a specific good or service that is available to consumers supply can relate to the amount available at a specific price or the amount available across a range of prices if displayed on a graph this relates closely to the demand for a good or se... | |
when a non price determinant has an external impact on supply the entire supply curve will shift for example consider technological innovations that influence how much of a good can be delivered instead of simply being a different point along an existing curve the entire supply curve will move and a new equilibrium poi... | law of supply and demandthe concept of supply is a cornerstone is the economic pillar of the law of supply and demand consider how consumers want to buy products for as low as possible while manufacturers retailers want to sell products for as high as possible the point at which supply and demand meet is what sets the ... | |
what are the 3 types of supply | supply may be broken into total supply short term supply and long term supply each measures the amount of goods available in a market differently and different agencies may use each set of information differently | |
what factors impact supply | supply is usually most directly related to price as the price of a good increases or decreases producers may be more or less inclined to produce that good based on anticipated profit margins for a similar reason the cost of production and a company s ability to incur expenses related to increasing supply also impact su... | |
what is the importance of supply | many consumers are interested in supply because of its impact on price should a manufacturer oversupply the market consumers may receive a price discount however supply is related to so many additional important concepts an efficient supply chain minimizes delays reduces costs and helps markets perform to their full po... | |
what is a supply chain | a supply chain is a network of individuals and companies that are involved in creating a product and delivering it to the consumer links on the chain begin with the producers of the raw materials and they end when the van delivers the finished product to the user supply chain management is a crucial process because an ... | |
what are the main supply chain models | the supply chain model that a company selects will depend on how the company is structured and its specific needs | |
what are supply chain management best practices | successful supply chain management systems benefit from several practices supply chain management vs business logistics management the terms supply chain management scm and business logistics management or simply logistics are often used interchangeably but logistics is one link in the supply chain logistics deals with... | |
what is the flow of manufacturing costs | efficient supply chain systems can get each piece of the product to the location where it s needed when it s needed this requires control of the flow of manufacturing costs the flow of manufacturing costs is most relevant to businesses that produce products that require many parts from several vendors a clothing manufa... | |
does the supply chain cause deflation | the increased efficiencies of supply chains have played a significant role in curbing inflation costs decrease as efficiencies in moving products from point a to point b increase this reduces the final cost to the consumer deflation is often regarded as a negative but supply chain efficiencies are one of the few exampl... | |
how did covid 19 affect the supply chain | one of the most severe economic problems caused by the covid 19 pandemic was damage to the supply chain its effects touched nearly every sector of the economy 1supplies of products of all kinds were delayed due to ever changing restrictions at national borders and long backups in ports 2demand for products changed abru... | |
what is supply chain management | supply chain management scm is the oversight and control of all the activities required for a company to convert raw materials into finished products that are then sold to users it provides centralized control for the planning design manufacturing inventory and distribution phases required to produce and sell a company... | |
what are the steps in a supply chain | the key steps in a supply chain include | |
what is an example of a supply chain | a supply chain begins with the sourcing of raw materials the raw materials are then hauled to a wholesaler that sells them in batches to manufacturers the manufacturer uses the materials to create a product which is then delivered to a retailer finally it s sold to a consumer the bottom linea supply chain is what lets ... | |
what is supply chain finance | supply chain finance scf is a term describing a set of technology based solutions that aim to lower financing costs and improve business efficiency for buyers and sellers linked in a sales transaction scf methodologies work by automating transactions and tracking invoice approval and settlement processes from initiatio... | |
how supply chain finance works | supply chain finance works best when the buyer has a better credit rating than the seller and can consequently source capital from a bank or other financial provider at a lower cost this advantage lets buyers negotiate better terms from the seller such as extended payment schedules meanwhile the seller can unload its p... | |
what is supply chain management scm | supply chain management scm is the monitoring and optimization of the production and distribution of a company s products and services it seeks to improve and make more efficient all processes involved in turning raw materials and components into final products and getting them to the ultimate customer effective scm ca... | |
how supply chain management scm works | scm represents an ongoing effort by companies to make their supply chains as efficient and economical as possible typically scm attempts to centrally control or link the production shipment and distribution of a product by managing the supply chain companies can cut excess costs and needless steps and deliver products ... | |
when sourcing goods companies should be mindful of lead times and how well equipped a supplier is to meet their needs | using machinery and labor to transform the raw materials or components the company has received from its suppliers into something new is the heart of the supply chain management process this final product is the ultimate goal of the manufacturing process though it is not the final stage of scm the manufacturing process... | |
why is supply chain management important | supply chain management is important because it can help achieve several business objectives for instance controlling manufacturing processes can improve product quality reducing the risk of recalls and lawsuits while helping to build a strong consumer brand at the same time control over shipping procedures can improve... | |
how are ethics and supply chain management related | ethics has become an increasingly important aspect of supply chain management even leading to the establishment of a set of principles called supply chain ethics many investors today want to know how companies produce their products treat their workforce and protect the environment as a result companies respond by inst... | |
how much do supply chain management jobs pay | supply chain managers across the united states earn as of may 28 2024 average annual salaries in the range of 111 000 to 142 000 according to the website salary com 5the bottom linea supply chain starts with the ordering of raw materials or components from a supplier and ends with the delivery of a finished product or ... | |
what is a supply curve | the supply curve illustrates the correlation between the cost of a product or service and the quantity of it that is available the supply curve is shown in a graph with the price on the left vertical axis and the quantity supplied on the horizontal axis the supply curve can be seen as a visual demonstration of how the ... | |
how a supply curve works | the supply curve will move upward from left to right illustrating the law of supply as the price of a given commodity increases the quantity supplied will increase all else being equal note that this formulation implies that price is the independent variable and quantity is the dependent variable in most disciplines th... | |
should the price of soybeans rise farmers will have an incentive to plant less corn and more soybeans and the total quantity of soybeans on the market will increase | the degree to which rising prices translate into rising quantity is called supply elasticity or price elasticity of supply if a 50 rise in soybean prices causes the number of soybeans produced to rise by 50 the supply elasticity of soybeans is 1 on the other hand if a 50 rise in soybean prices only increases the quanti... | |
what is the law of supply and demand | the law of supply and demand is a rule of economics stating that the price of a product will reach an equilibrium based on the amount of that good that is available the supply and the amount that customers want the demand image by julie bang investopedia 2020 | |
what is the demand curve | the demand curve is the complement to the supply curve in the law of supply and demand unlike the supply curve the demand curve is downward sloping this illustrates that the higher the price of a product the less demand there will be for it all else being equal | |
what factors can affect the supply curve | the supply curve can shift based on numerous factors including changes in production or raw materials costs technological progress the level of competition the number of producers the number of sellers and changes in the regulatory and tax environment | |
what factors can affect the demand curve | demand is influenced by consumer preferences and the amount of disposable income they have to spend the presence of viable substitutes or alternatives can also shift the demand curve the bottom linethe supply curve is a literal illustration of the relationship between supply and demand the lower the supply the higher t... | |
what is supply shock | a supply shock is an unexpected event that suddenly changes the supply of a product or commodity resulting in an unforeseen change in price supply shocks can be negative resulting in a decreased supply or positive yielding an increased supply assuming aggregate demand is unchanged a negative or adverse supply shock cau... | |
what does a supply shock look like | a supply shock occurs when an unpredictable event happens that suddenly either decreases or increases the supply of a product or commodity the former causes a price rise while the latter results in a price decrease | |
what kind of events cause supply shocks | they can be anything from a natural disaster to an economic recession to a pandemic to an act of war or terrorism technological breakthroughs can also be a culprit as can political acts such as the 1973 oil embargo organized by opec in response to the arab israeli war 7did the covid 19 pandemic cause supply shocks covi... | |
how long do supply shocks last | supply shocks can be either temporary such as those caused by the global financial crisis of 2009 or permanent such as the introduction of fracking technology which resulted in the u s becoming a net energy exporter in 2019 the first time this had happened since 1952 according to the world bank in 2020 permanent shocks... | |
what is support | a support level is the price level that an asset doesn t fall below for a period of time an asset s support level is created by buyers entering the market whenever the asset dips to a lower price the simple support level can be charted in technical analysis by drawing a line along the lowest lows for the period being c... | |
what do support levels tell you | support level is the level at which buyers tend to purchase or enter into a stock it refers to the stock share price that a company rarely goes below the support level holds and is confirmed when the price of a stock falls toward its support level or the stock continues to decline the previously demonstrated support le... | |
what is trading volume | trading volume represents the number of trades that have taken place in a set period it can measure just one security or the entire market depending on your needs and goals the period is typically one day but it can be longer 2 | |
what is a moving average | a moving average is a technical indicator that reflects changes in data from one time to another it s used to try to determine the direction of a trend and is based on a variety of data it s typically calculated repeatedly over the course of a trading day and it often changes each time thus the term moving 3 | |
what is the resistance level | the resistance level is the price point at which a stock has trouble moving beyond think of the support level as the floor and the resistance level as the ceiling it s the level that occurs when supply prevents a stock from moving higher because sellers are less likely to sell 4the bottom linenumerous technical indicat... | |
what does supranational mean | a supranational organization is a multinational union or association in which member countries cede authority and sovereignty on at least some internal matters to the group whose decisions are binding on its members in short member states share in decision making on matters that will affect each country s citizens the ... | |
what is a surcharge | a surcharge is an additional charge fee or tax that is added to the cost of a good or service beyond the initially quoted price a surcharge is often added to an existing tax and is not included in the stated price of the good or service the amount of a surcharge varies and can be a fixed amount or a percentage this cha... | |
how surcharges work | surcharges are additional fees and or taxes that consumers are required to pay when they buy certain goods and services surcharges are typically added at the final stage of purchase when the buyer pays for the good or service surcharges may be set at specific dollar amounts such as 5 per transaction they may also be ba... | |
how to avoid surcharges | there are a number of steps a consumer can take to avoid surcharges regardless of the type or situation in which it occurs for financial surcharges many merchants add a surcharge if you pay with a credit card especially if it s a small transaction to avoid this surcharge you can use a debit card or pay in cash some sur... | |
how do surcharges work | surcharges are additional fees or taxes that are added to the purchase price of goods and services depending on the good or service a surcharge can be flat fees or a percentage of the purchase price it is added at the time of purchase by the seller or service provider surcharges are imposed by businesses governments se... | |
what is a broadcast tv surcharge | television networks impose broadcast tv surcharges on cable providers to carry their signals over the airwaves the fee is negotiable between networks and cable companies and is allowed by federal law rather than increase the price of the service the surcharge is passed on to cable company customers each month | |
what are some examples of surcharges | examples of surcharges include atm fees fuel surcharges broadcast tv surcharges disposal fees handling fees hazardous waste fees filing fees tips and gratuities processing fees convenience fees and checkout fees | |
which states allow credit card surcharges | credit card surcharging is a fee structure that allows credit card companies to charge consumers to process transactions although surcharging isn t illegal across the united states there are certain jurisdictions where companies can t impose these fees on their customers including connecticut massachusetts and puerto r... | |
what is a surety | a surety is a promise or agreement made by one party that debts and financial obligations will be paid in effect a surety acts as a guarantee that a person or an organization assumes responsibility for fulfilling financial obligations in the event that the debtor defaults and is unable to make payments the party that g... | |
how sureties work | as noted above a surety is a guarantee or promise that assures payment through a legally binding contract under the agreement one party promises to fulfill the financial obligations if the second party the debtor fails to pay the third party the creditor the surety is the company that provides a line of credit to guara... | |
what is the purpose of a surety | a surety is the guarantee of the debts of one party by another this is intended to lower risk to the lender which might in turn lower interest rates for the borrower | |
what is a surety limit | a surety bond protects an obligee against losses up to the limit of the bond the bond amount is the monetary limit up to which the obligee requires the bond to be issued | |
what are the benefits available to a surety | surety bonds provide a defense against false claims and act as clear cut representation when claims occur because surety bonds also lower risk for lenders they can reduce interest rates for borrowers the bottom linea surety is a person or party that takes responsibility for the debt default or other financial responsib... | |
what is a surplus | a surplus describes the amount of an asset or resource that exceeds the portion that s actively utilized a surplus can refer to a host of different items including income profits capital and goods in the context of inventories a surplus describes products that remain sitting on store shelves unpurchased in budgetary co... | |
what is an example of a surplus | take this example of a consumer surplus let s say that you bought an airline ticket for a flight to miami during school vacation week for 100 but you were expecting and willing to pay 300 for that ticket the 200 represents your consumer surplus | |
what is a surplus in economics | a surplus in economics can be either a consumer surplus or a producer surplus consumer surplus occurs when the price for a product or service is lower than the highest price a consumer would willingly pay a producer surplus is when goods are sold at a higher price than the lowest price the producer was willing to sell ... | |
what is a surplus auction | surplus auctions are a way that the federal government state and local governments and their agencies can dispose of surplus property which can include everything from office furniture to heavy machinery vehicles and even aircraft if this property cannot be donated to another agency or a nonprofit organization the gene... | |
how do you calculate a surplus | surplus is the amount of an asset or resource that exceeds the portion that is utilized to calculate consumer surplus for example just subtract the actual price the consumer paid from the amount they were willing to pay the bottom linea surplus generally speaking occurs when there is more of something than is needed at... | |
what is surplus lines insurance | surplus lines insurance protects against a financial risk that is too great or too uncommon for a regular insurance company to take on surplus lines insurance can be purchased by individuals or companies understanding surplus lines insurancesurplus lines insurance falls into the category of property and casualty insura... | |
does the federal government regulate insurance | for the most part no the federal mccarran ferguson act of 1945 delegated that authority to the states exempting insurance companies and the majority of their products from most kinds of federal regulation 6 | |
what is excess and surplus e s lines insurance | excess and surplus e s lines insurance is basically another name for surplus lines insurance that is used by some carriers the bottom lineindividuals and businesses buy surplus lines insurance to protect themselves against financial risks that are too large or too rare for a regular insurance company to be willing to t... | |
what is survivorship bias | survivorship bias or survivor bias is the tendency to view the performance of existing stocks or funds in the market as a representative comprehensive sample without regarding those that have gone bust survivorship bias can result in the overestimation of historical performance and general attributes of a fund or marke... | |
what is sustainability | in the broadest sense sustainability refers to the ability to maintain or support a process continuously over time in business and policy contexts sustainability seeks to prevent the depletion of natural or physical resources so that they will remain available for the long term | |
how sustainability works | accordingly sustainable policies emphasize the future effect of any given policy or business practice on humans ecosystems and the wider economy the concept often corresponds to the belief that without major changes to the way the planet is run it will suffer irreparable damage as concerns about anthropogenic climate c... | |
what are the 3 principles of sustainability | the principles of sustainability refer to the three core concepts of environmental social and economic sustainability sometimes broken down as people planet and profits this means that in order to be considered sustainable a business must be able to conserve natural resources support a healthy community and workforce a... | |
what activities promote sustainability | many sustainable businesses seek to reduce their environmental footprint by using renewable energy or by reducing waste companies may also be more sustainable by promoting diversity and fairness in their workforce or enacting policies that benefit the local community | |
what is economic sustainability | economic sustainability refers to a company s ability to continue its operations over a long term horizon in order to be economically sustainable a company must be able to ensure that it will have adequate resources workers and consumers for its products into the distant future | |
what are the most sustainable companies | there are many different ways to measure and compare sustainable companies canadian research firm corporate knights publishes a list of the 100 most sustainable companies the list is topped by the danish companies vestas wind systems and chr hansen holding autodesk inc in the united states schneider electric in france ... | |
what products are not sustainable | non sustainable products uses resources that cannot be replaced or replenished at the same speed that they are consumed products that rely on fossil fuels cannot be sustainable because the resources used to make them can never be replaced other resources such as as rainforest timber fishery stocks sea corals and other ... | |
what is the sustainable growth rate sgr | the sustainable growth rate sgr is the maximum rate of growth that a company or social enterprise can sustain without having to finance growth with additional equity or debt in other words it is the rate at which the company can grow while using its own internal revenue without borrowing from outside sources the sgr in... | |
why is the sustainable growth rate important | the sustainable growth rate is an important measurement because it gives a company an accurate picture of expansion and equity requirements not all companies want to take on additional partners or outside financing so the sgr allows the company to toe the line when it comes to growth using their own revenues and capita... | |
how do you calculate the sustainable growth rate | you calculate the sustainable growth rate by taking the company s return on equity times the result of 1 minus the dividend payout ratio another way to calculate it is to multiply the retention rate by the return on equity the retention rate represents the percentage of earnings that the company has not paid out in div... | |
how can a company increase growth | a company has many different ways to increase growth a ceo could give a keynote speech that drives customers the company could do a product rollout designed to maximize sales or a company could increase growth by cutting costs such as dividends or unprofitable divisions the bottom linecompanies need to stay on top of t... | |
what is a swap | a swap is a derivative contract through which two parties exchange the cash flows or liabilities from two different financial instruments most swaps involve cash flows based on a notional principal amount related to a loan or bond although the security can be almost anything usually the principal does not change hands ... | |
what is a swap execution facility sef | a swap execution facility sef is an electronic platform provided by a corporate entity that allows participants to buy and sell swaps in a regulated and transparent manner they are required by law as part of the sweeping wall street reforms stemming from the 2010 dodd frank act understanding swap execution facilitya se... | |
how does a swap execution facility work | swap execution facilities sefs are electronic matching platforms that bring together buyers and sellers of swaps contracts much like any other electronic exchange these are regulated venues that rely on a request for quote mechanism | |
why were swap execution facilities created | swap execution facilities were created under the 2010 dodd frank act to better regulate and increase transparency for swaps deals both before and after the trade who must register with an sef according to the cftc any person who offers a trading system or platform in which more than one market participant has the abili... | |
are swaps required to be transacted through a swap execution facility | while many swaps now must be traded on a sef financial institutions can still transact certain swaps over the counter otc directly between one another but swap trades that are eligible to be cleared must use a sef |
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