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how to implement enterprise risk management practices
erm practices will vary based on a company s size risk preferences and business objectives below are best practices that most companies can use to implement erm strategies as a company implements erm practices it is widely advised to continually gather feedback from all employees everyone will have a different perspect...
what types of risk does enterprise risk management address
erm can help devise plans for almost any type of business risk business risk threatens a company s ability to survive and these risks may be further classified into different risks discussed below in general erm most commonly addresses the following types of risk ideal entities for erm systemserm is particularly well s...
what is erm
erm is a company s approach to managing risk it is the practices policies and framework for how a company handles a variety of risks that its business faces
why is erm important
erm is important because it helps prevent losses or unexpected negative outcomes erm is also important because it helps a company set the plans in place to strategically approach risk and garner employee buy in
what are the 3 types of enterprise risk
erm often summarizes the risks a company faces into operational financial and strategic risks operational risks impact day to day operations while strategic risks impact long term plans financial risks impact the general financial standing and health of a company
what are the 8 components of erm
the coso framework for erm identifies eight components internal environment objective setting event identification risk assessment risk response control activities information communication and monitoring these eight core components drive a company s erm practices
what is the difference between risk management and enterprise risk management
risk management has traditionally been used to describe the practices and policies surrounding a specific risk that a company faces more modern risk management has introduced erm a comprehensive company wide approach to view risk holistically for the entire company the bottom lineas a company makes sells and delivers g...
what is enterprise value ev
enterprise value ev measures a company s total value often used as a more comprehensive alternative to market capitalization ev includes in its calculation not only the market capitalization of a company but also short term and long term debt and any cash or cash equivalents on the company s balance sheet michela butti...
what does ev tell you
enterprise value ev differs significantly from simple market capitalization in several ways and many consider it to be a more accurate representation of a firm s value ev tells investors or interested parties a company s value and how much another company would need if it wanted to purchase that company there is one ot...
why doesn t market capitalization properly represent a firm s value it leaves a lot of essential factors out such as a company s debt and cash reserves
enterprise value is a modification of market cap as it incorporates debt and cash for determining a company s value here s an example imagine two identical widget manufacturers company a and company b have the same stock price of 4 32 per share each has 1 million outstanding shares with a market cap of 4 32 million now...
what is enterprise value and why is it important
enterprise value shows a company s total value and is generally used in mergers and acquisitions to evaluate a prospect you might also see embedded value used to value life insurance companies primarily in europe
how do you calculate enterprise value
to calculate market capitalization multiply the number of outstanding shares by the current stock price next total all debt on the company s balance sheet finally add the market capitalization to the total debt and subtract any cash and cash equivalents from the result
what is a good enterprise value
enterprise value is a good indicator of a company s total value but the ev ebitda is a better indicator demonstrating the total value to actual earnings an ev ebitda below 10 is considered healthy
what is enterprise value vs market value
enterprise value is the total value of a company while market value is the value of its shares on the stock market market capitalization is the total value of all sthares on the stock market the bottom lineenterprise value estimates a company s total value generally used by other companies when considering a merger or ...
what is the enterprise value to revenue multiple ev r
the enterprise value to revenue multiple ev r is a measure of the value of a stock that compares a company s enterprise value to its revenue ev r is one of several fundamental indicators that investors use to determine whether a stock is priced fairly the ev r multiple is also often used to determine a company s valuat...
how to calculate enterprise value to revenue multiple ev r
the enterprise value to revenue ev r is easily calculated by taking the enterprise value of the company and dividing it by the company s revenue ev r enterprise value revenue where enterprise value mc d cc mc market capitalization d debt cc cash and cash equivalents begin aligned text ev r frac text enterprise value te...
what is enterprise value to sales ev sales
enterprise value to sales ev sales is a financial valuation measure that compares the enterprise value ev of a company to its annual sales the ev sales multiple gives investors a quantifiable metric of how to value a company based on its sales while taking account of both the company s equity and debt the formula for e...
how to calculate enterprise value to sales
enterprise value to sales is calculated by a slightly more complicated version of enterprise value with a few more variables is sometimes used the more complex formula for ev is ev mc d ps mi cc where ps preferred shares mi minority interest begin aligned text ev text mc text d text ps text mi text cc textbf where text...
what does enterprise value to sales tell you
enterprise value to sales is an expansion of the price to sales p s valuation the latter of which uses market capitalization instead of enterprise value ev sales is perceived to be more accurate than p s in part because the market capitalization alone does not take a company s debt into account when valuing the company...
what is the entity theory
the entity theory is a legal theory and accounting concept that all of the business activity conducted by any corporation or limited liability business is separate from that of its owners the entity theory has two aspects in accounting it means that business and personal accounts transactions assets and liabilities sho...
what is an entrepreneur
an entrepreneur is an individual who creates a new business bearing most of the risks and enjoying most of the rewards the process of setting up a business is known as entrepreneurship entrepreneurs play a key role in any economy using the skills and initiative necessary to anticipate needs and bring new ideas to marke...
why are entrepreneurs important
entrepreneurship is one of the resources economists categorize as integral to production the other three being land natural resources labor and capital an entrepreneur combines the first three of these to manufacture goods or provide services they typically create a business plan hire labor acquire resources and financ...
what are different types of entrepreneurs
not every entrepreneur is the same and not all have the same goals here are a few types of entrepreneurs builders seek to create scalable businesses within a short time frame builders typically pass 5 million in revenue in the first two to four years and continue to build up until 100 million or beyond these individual...
how to become an entrepreneur
after retiring her professional dancing shoes judi sheppard missett became an entrepreneur by teaching a dance class in order to earn some extra cash but she soon learned that women who came to her studio were less interested in learning precise steps than they were in losing weight and toning up sheppard missett then ...
what else do entrepreneurial success stories have in common they invariably involve industrious people diving into things they re naturally passionate about
giving credence to the adage find a way to get paid for the job you d do for free passion is arguably the most important attribute entrepreneurs must have and every edge helps while the prospect of becoming your own boss and raking in a fortune is alluring to entrepreneurial dreamers the possible downside to hanging ou...
when starting out it s essential to personally handle sales and other customer interactions whenever possible direct client contact is the clearest path to obtaining honest feedback about what the target market likes and what you could be doing better if it s not always practical to be the sole customer interface entre...
personally answering phones is one of the most significant competitive edges home based entrepreneurs hold over their larger competitors in a time of high tech backlash where customers are frustrated with automated responses and touch tone menus hearing a human voice is one surefire way to entice new customers and make...
what does it mean to be an entrepreneur
an entrepreneur is an individual who starts their own business based on an idea they have or a product they have created while assuming most of the risks and reaping most of the rewards of the business
what is the best definition of entrepreneurship
entrepreneurship is the process of setting up a business taking it from an idea to realization
what are the four types of entrepreneurs
four types of entrepreneurs include builders opportunists innovators and specialists
what are the seven characteristics of entrepreneurs
seven primary characteristics among entrepreneurs include versatility resilience flexibility money savviness business smarts focus and having strong communication skills the bottom linean entrepreneur is an individual who takes an idea or product and creates a business a process known as entrepreneurship creating a bus...
what is an envelope
envelopes are technical indicators that are typically plotted over a price chart with upper and lower bounds the most common example of an envelope is a moving average envelope which is created using two moving averages that define upper and lower price range levels envelopes are commonly used to help traders and inves...
how envelopes work
traders can interpret envelopes in many different ways but most use them to define trading ranges when the price reaches the upper bound the security is considered overbought and a sell signal is generated conversely when the price reaches the lower bound the security is considered oversold and a buy signal is generate...
what is environmental economics
environmental economics is the study of the cost effective allocation use and protection of the world s natural resources economics broadly speaking is the study of how humans produce and consume goods and services environmental economics focuses on how they use and manage finite resources in a manner that serves the p...
what is the difference between environmental economics and ecological economics
environmental and ecological economics are both sub fields of economic thought that study the interactions between human activity and the natural environment the difference is that environmental economics studies the relationship between the environment and the economy while ecological economics considers the economy t...
what is the relationship between neoclassical economics and environmental economics
neoclassical economics is a broad theory that focuses on supply and demand as the driving forces of economic activity environmental economics is based on the neoclassical model but places a greater emphasis on negative externalities such as pollution and ecosystem loss
what are some jobs in environmental economics
environmental economists may find ready employment at the environmental protection agency or other environmental bodies at the state or local level these specialists are responsible for enforcing regulations to protect the environment and calculating the economic costs of enforcing regulations
what is the environmental protection agency epa
the environmental protection agency epa was established in december 1970 by the executive order of president richard nixon it is an agency of the united states federal government whose mission is to protect human and environmental health headquartered in washington d c the epa is responsible for creating standards and ...
why was the epa created it was formed in response to widespread public environmental concerns that gained momentum in the 1950s and 1960s from the epa s creation it has sought to protect and conserve the natural environment and improve the health of humans by researching the effects of and mandating limits on the use o...
the epa regulates the manufacturing processing distribution and use of chemicals and other pollutants also the epa is charged with determining safe tolerance levels for chemicals and other pollutants in food animal feed and water the epa enforces its findings through fines sanctions and other procedures under the trump...
how the epa enforces laws
to protect communities and the environment the epa works to enforce laws such as the clean air act the safe drinking water act the national environmental education act and the clean water act some of which predate the formation of the agency itself the epa is also responsible for the detection and prevention of environ...
what is esg investing
esg stands for environmental social and governance esg investing refers to how companies score on these responsibility metrics and standards for potential investments environmental criteria gauge how a company safeguards the environment social criteria examine how it manages relationships with employees suppliers custo...
how esg investing works
esg investing is sometimes referred to as sustainable investing responsible investing impact investing or socially responsible investing sri to assess a company based on esg criteria investors look at a broad range of behaviors and policies esg investors seek to ensure the companies they fund are responsible stewards o...
how is esg investing different from sustainable investing
esg and sustainability are closely related esg investing screens companies based on criteria related to being pro social environmentally friendly and with good corporate governance together these features can lead to sustainability esg therefore looks at how a company s management and stakeholders make decisions sustai...
what does esg mean for a business
adopting esg principles means corporate strategy focuses on environment social and governance this means taking measures to lower pollution and co2 output and reduce waste it also means having a diverse and inclusive workforce at the entry level and the board of directors
how do i know which investments are esg
several financial firms have esg ratings and scoring systems for instance msci has a rating scheme covering over 8 500 companies giving them scores and letter grades based on their compliance with esg standards and initiatives several other companies like morningstar and bloomberg have also created criteria for scoring...
what is the equal credit opportunity act ecoa
the equal credit opportunity act ecoa is a federal civil rights law designed to ensure fair lending practices it prohibits lenders from discriminating against loan applicants with the sole exception being their ability to repay the loan specifically ecoa protects consumers from discrimination based on race color religi...
how the equal credit opportunity act ecoa works
the equal credit opportunity act was enacted in 1974 and is detailed in title 15 of the united states code 5 the act as implemented by regulation b states that individuals applying for loans and other credit can be evaluated only using factors directly related to their creditworthiness it prohibits creditors and lender...
when a borrower applies for credit the lender may ask about some of the personal facts that ecoa prohibits 9 while these questions can t be used to make lending decisions and answering them is optional the information does help federal agencies enforce anti discrimination laws 10
another aspect of ecoa allows each spouse in a marriage to have a credit history in their own name still if a borrower has any joint accounts with their spouse the accounts will appear on both credit reports that means a spouse s financial behavior can positively or negatively impact an individual borrower s credit sco...
when you apply for a loan or line of credit ecoa gives you certain rights
additionally creditors can t detecting the signs of credit discriminationcredit discrimination is not always obvious which makes it hard to spot cfpb advises consumers to watch for warning signs of ecoa violations
what to do if you suspect discrimination
if you feel you ve been discriminated against at any point during a credit transaction there are several steps you can take examples of equal credit opportunity act ecoa enforcementone common violation of the ecoa is charging higher rates or fees to black indigenous and people of color bipoc applicants in july 2012 the...
what is the penalty for violating the equal credit opportunity act ecoa
lenders found in violation of ecoa can potentially face class action lawsuits from the department of justice doj if the doj or any affiliate agencies recognize a pattern of discrimination 2 the consumer financial protection bureau enforces ecoa with other federal agencies if found guilty the offending organization coul...
does ecoa apply to all creditors
yes the equal credit opportunity act applies to all creditors financial institutions and other firms engaged in the extension of credit can t discriminate against an applicant based on a prohibited basis during any aspect of a credit transaction additionally lending officers and employees can t do anything that would o...
what is the equal employment opportunity commission eeoc
the u s equal employment opportunity commission eeoc is the agency responsible for enforcing federal laws regarding discrimination or harassment against a job applicant or an employee in the united states the eeoc was formed by congress to enforce title vii of the civil rights act of 1964 opening its door for business ...
how the eeoc works
the eeoc enforces federal laws that make it illegal to discriminate because of a person s race color religion sex including pregnancy gender identity and sexual orientation national origin age 40 or older disability or genetic information 4 in addition it is against the law to discriminate against a person who complain...
how does the eeoc prevent discrimination
the eeoc works on preventing workplace discrimination through outreach and a variety of educational and technical assistance programs employers are liable for both their own behavior and that of their staff members even including independent contractors
what to do if you feel you ve been discriminated against at work
if you believe you ve been discriminated against at work because of your race color religion sex including pregnancy gender identity and sexual orientation national origin age 40 or older disability or genetic information then you can file a charge of discrimination with the eeoc this is a signed statement describing h...
equal weight is a type of proportional measuring method that gives the same importance to each stock in a portfolio index or index fund so stocks of the smallest companies are given equal statistical significance or weight to the largest companies when it comes to evaluating the overall group s performance
an equal weight index is also known as an unweighted index understanding equal weightequal weight differs from the method more commonly used by indexes funds and portfolios in which stocks are weighted based on their market capitalization many of the largest and most well known market indices are either market capitali...
what is an equated monthly installment emi
an equated monthly installment emi is a fixed payment amount made by a borrower to a lender at a specified date each calendar month equated monthly installments are applied to both interest and principal each month so that over a specified number of years the loan is paid off in full in the most common types of loans s...
how an equated monthly installment emi works
emis differ from variable payment plans in which the borrower can pay higher amounts at his or her discretion in emi plans borrowers are usually only allowed one fixed payment amount each month the benefit of an emi for borrowers is that they know precisely how much money they will need to pay toward their loan each mo...
what is the equation of exchange
the equation of exchange is an economic identity that shows the relationship between the money supply the velocity of money the price level and an index of expenditures it says that the total amount of money that changes hands in the economy will always equal the total money value of the goods and services that change ...
what is fisher s equation of exchange
fisher s equation of exchange is mv pt where m money supply v velocity of money p price level and t transactions when t cannot be obtained it is often substituted with y which is national income nominal gdp
what is the formula for gdp
the formula for gross domestic product gdp is gdp c i g nx where c consumption i business investment g government spending and nx net exports
what is the quantity theory of money
the quantity theory of money states that money supply and price level are directly proportional to each other when there is a change in the price level there is a proportional change in the money supply and vice versa the bottom linethe equation of exchange is a mathematical representation of the quantity theory of mon...
what is equilibrium
equilibrium is the state in which market supply and demand balance each other and as a result prices become stable generally an over supply of goods or services causes prices to go down which results in higher demand while an under supply or shortage causes prices to go up resulting in less demand the balancing effect ...
when markets aren t in a state of equilibrium they are said to be in disequilibrium disequilibrium can happen in a flash in a more stable market or can be a systematic characteristic of certain markets
at times disequilibrium can spill over from one market to another for instance if there aren t enough transport companies or resources available to ship coffee internationally then the coffee supply for certain regions could be reduced affecting the equilibrium of coffee markets economists view many labor markets as be...
how do you calculate equilibrium price
in economics the equilibrium price is calculated by setting the supply function and demand function equal to one another and solving for the price
what is equilibrium quantity
the amount supplied that exactly equals demand is the equilibrium quantity in such a case there will neither be an oversupply nor a shortage
what is equilibrium
equilibrium is the state in which market supply and demand balance each other and as a result prices become stable generally an over supply of goods or services causes prices to go down which results in higher demand while an under supply or shortage causes prices to go up resulting in less demand the balancing effect ...
when markets aren t in a state of equilibrium they are said to be in disequilibrium disequilibrium can happen in a flash in a more stable market or can be a systematic characteristic of certain markets
at times disequilibrium can spill over from one market to another for instance if there aren t enough transport companies or resources available to ship coffee internationally then the coffee supply for certain regions could be reduced affecting the equilibrium of coffee markets economists view many labor markets as be...
how do you calculate equilibrium price
in economics the equilibrium price is calculated by setting the supply function and demand function equal to one another and solving for the price
what is equilibrium quantity
the amount supplied that exactly equals demand is the equilibrium quantity in such a case there will neither be an oversupply nor a shortage
what is equitable relief
equitable relief is a court granted remedy that requires a party to act or refrain from performing a particular act in cases where legal remedies are not considered to provide sufficient restitution
how equitable relief works
equitable relief is distinct from a legal claim such as monetary compensation and is employed to prompt or prevent action in cases when a legal remedy would not constitute adequate restitution for the breach of contract or other offense this prompting often takes the form of a court injunction which enforces the remedy...
what is equity
equity referred to as shareholders equity or owners equity for privately held companies represents the amount of money that would be returned to a company s shareholders if all of the assets were liquidated and all of the company s debt was paid off in the case of liquidation in the case of acquisition it is the value ...
how shareholder equity works
by comparing concrete numbers reflecting everything the company owns and everything it owes the assets minus liabilities shareholder equity equation paints a clear picture of a company s finances easily interpreted by investors and analysts 1 equity is used as capital raised by a company which is then used to purchase ...
what the components of shareholder equity are
retained earnings are part of shareholder equity and are the percentage of net earnings that were not paid to shareholders as dividends think of retained earnings as savings since it represents a cumulative total of profits that have been saved and put aside or retained for future use retained earnings grow larger over...
when an investment is publicly traded the market value of equity is readily available by looking at the company s share price and its market capitalization for private entities the market mechanism does not exist so other valuation forms must be done to estimate value
private equity generally refers to such an evaluation of companies that are not publicly traded the accounting equation still applies where stated equity on the balance sheet is what is left over when subtracting liabilities from assets arriving at an estimate of book value privately held companies can then seek invest...
when determining an asset s equity particularly for larger corporations it is important to note these assets may include both tangible assets like property and intangible assets like the company s reputation and brand identity through years of advertising and the development of a customer base a company s brand can com...
for example many soft drink lovers will reach for a coke before buying a store brand cola because they prefer the taste or are more familiar with the flavor if a 2 liter bottle of store brand cola costs 1 and a 2 liter bottle of coke costs 2 then coca cola has brand equity of 1 there is also such a thing as negative br...
what is equity in finance
equity is an important concept in finance that has different specific meanings depending on the context perhaps the most common type of equity is shareholders equity which is calculated by taking a company s total assets and subtracting its total liabilities shareholders equity is therefore essentially the net worth of...
what are some other terms used to describe equity
other terms that are sometimes used to describe this concept include shareholders equity book value and net asset value depending on the context the precise meanings of these terms may differ but generally speaking they refer to the value of an investment that would be left over after paying off all of the liabilities ...
how is equity used by investors
equity is a very important concept for investors for instance in looking at a company an investor might use shareholders equity as a benchmark for determining whether a particular purchase price is expensive if that company has historically traded at a price to book value of 1 5 for instance then an investor might thin...
how is equity calculated
equity is equal to total assets minus its total liabilities these figures can all be found on a company s balance sheet for a company for a homeowner equity would be the value of the home less any outstanding mortgage debt or liens the bottom linefinancial equity represents the ownership interest in a company s assets ...
what is equity accounting
equity accounting is an accounting process for recording investments in associated companies or entities companies sometimes have ownership interests in other companies typically equity accounting also called the equity method is applied when an investor or holding entity owns 20 50 of the voting stock of the associate...
when an investor acquires 20 or more of the voting stock of an investee it is presumed that without evidence to the contrary that an investor maintains the ability to exercise significant influence over the investee conversely when an ownership position is less than 20 there is a presumption that the investor does not ...
interestingly substantial or even majority ownership of an investee by another party does not necessarily prohibit the investor from also having significant influence with the investee for instance many sizable institutional investors may enjoy more implicit control than their absolute ownership level would ordinarily ...
when do you use the equity accounting method
you should use the equity accounting method if the reporting entity has a significant but not controlling interest in another company in practice this means an ownership stake of 20 50 in the other company if the reporting company has a controlling interest 51 or greater it is reported as a consolidated subsidiary for ...
what are the rules for the equity accounting method
under the equity accounting method an investing company records its stake in another company on its own balance sheet it also records the profits or losses of the invested company on its own income statement
what are the problems with the equity accounting method
one critique of the equity accounting method is that it does not provide usable insights to investors although it records the assets and profits of an investee in its own financial statements the investing company does not actually control how the investee uses its assets and it does not receive any financial profit un...
what is the equity capital market ecm
the equity capital market ecm refers to the arena where financial institutions help companies raise equity capital and where stocks are traded it consists of the primary market for private placements initial public offerings ipos and warrants and the secondary market where existing shares are sold as well as futures op...
what is an equity co investment
an equity co investment is a minority investment in a company made by investors alongside a private equity fund manager or venture capital vc firm equity co investment enables other investors to participate in potentially highly profitable investments without paying the usual high fees charged by a private equity fund ...
what role does the co investor play in an equity co investment
equity co investors are generally high net worth individuals and institutional investors such as endowments pension funds and corporations these investors provide a minority stake in an equity co investment less than 50 but have no decision making or voting power on how the investment or fund is operated as such invest...
how much money have co investors put into deals
according to s p global sovereign wealth funds contributed the most to co investment deals between 2018 and 2023 this amounted to 331 41 billion for 469 deals corporate investors made the most investments providing financing to 3 182 deals for a total of 254 02 billion pension funds co invested in 288 deals with 193 40...
do equity co investments always work
equity co investments present a big opportunity for institutional and high net worth individuals promising access to new and different markets and the potential for higher returns but they don t always work out one such example is the case of brazilian data center company aceco t1 private equity firm kkr acquired the c...
what is equity compensation
equity compensation is non cash pay that is offered to employees equity compensation may include options restricted stock and performance shares all of these investment vehicles represent ownership in the firm for a company s employees 1equity compensation allows the employees of the firm to share in the profits via ap...
what is an equity derivative
an equity derivative is a financial instrument whose value is based on the equity movements of the underlying asset for example a stock option is an equity derivative because its value is based on the price movements of the underlying stock investors can use equity derivatives to hedge the risk associated with taking l...
what is an equity efficiency tradeoff
an equity efficiency tradeoff is when there is some kind of conflict between maximizing economic efficiency and maximizing the equity or fairness of society in some way when and if such a tradeoff exists economists or public policymakers may decide to sacrifice some amount of economic efficiency for the sake of achievi...
why do equity efficiency tradeoffs occur
maximizing economic efficiency and ensuring the equal distribution of resources seldom go hand in hand making equity efficiency tradeoffs fairly common there are arguments that economic gain doesn t necessarily have to come at the expense of greater inequality however in most capitalist societies that is precisely what...
what is more important equity or efficiency
both are important though they cannot always be achieved simultaneously most economies generally strive to get the maximum benefits from the resources at their disposal which seems like a no brainer the issue is making sure those benefits are distributed fairly among all people in society it s tricky to keep everyone h...
what is equity financing
equity financing is the process of raising capital through the sale of shares companies raise money because they might have a short term need to pay bills or need funds for a long term project that promotes growth by selling shares a business effectively sells ownership of its company in return for cash equity financin...
how equity financing works
equity financing involves the sale of common stock and other equity or quasi equity instruments such as preferred stock convertible preferred stock and equity units that include common shares and warrants this action can affect existing shareholders and impact the ability to reach new shareholders a startup that grows ...
when deciding whether to seek debt or equity financing companies usually consider these three factors
if a company has given investors a percentage of their company through the sale of equity the only way to remove them and their stake in the business is to repurchase their shares a process called a buy out however repurchasing the shares will likely cost more than you received when you issued them reasons to choose eq...
how does equity financing work
equity financing involves selling a portion of a company s equity in return for capital by selling shares owners effectively sell ownership of their company in return for cash