vania-janet/multiturn-rag-retrieval-data huggingface dataset:
When I invest in a business valued at $50,000, I pay $25,000 and receive 50% equity. Does that $25,000 go to the current owner of the business, or into the capital of the business itself?  Who receives the money depends on who is selling you the equity.  There are a couple of different scenarios that can fit your question. You could buy existing shares from the current owner(s) of the company.  In this case, the current owner(s) would be receiving the funds from you, and in return giving you their stake in the company.  So if you all agree that the value of the business is $50,000, and you give $25,000 to the current owner(s), they give you half of their shares.  The value of the company has not changed. The company could be issuing new shares.  This is called stock dilution, or an increase in authorized share capital.  Let's say that everyone agrees that the value of the business is $50,000.  The company could create new shares and sell them to you for $25,000.  In this case, the value of the company has jumped to $75,000; you now control one-third of the company, and the existing owner(s), who previously owned 100% of the company, now only own two-thirds.  In order for you to end up with 50% of the company in this case, you would have to invest $50,000 instead, which would result in the company being valued at $100,000.   If you are wondering why the current owners would agree to this second scenario, there are two questions that address this:
Thanks to this youtube video I think I understood the required calculation. Based on following notation: then the formula to find x is: I found afterwards an example on IB site (click on the link 'How to Determine the Last Stock Price Before We Begin to Liquidate the Position') that corroborate the formula above.
Treat each transaction as separate, with its own principal, its own gain, and its own number of days.  Then the total annualized return is just a weighted average of each annualized return, with the weighting related to the number of shares in that transaction.
"What you need to do is go to yahoo finance and look at different stock's P/E ratios. You'll quickly see that the stocks can be sorted by this number. It would be an interesting exercise to get an idea of why P/E isn't a fixed number, how certain industries cluster around a certain number, but even this isn't precise. But, it will give you an idea as to why your question has no answer. ""Annual earnings are $1. What is the share price?"" ""Question has no answer"""
"Black-Scholes! I work as LP in private market and every time I email some IR asking how some of their obscure convertible bond valuation is determined in their quarterly report, they just reply ""based on black-scholes model"" and all I can reply is ""thanks"". I never understand how that really works! Is there anyway you can go through a example, demonstrate how to calculate a simple investment instrument valuation using that model with me? Thanks a million!"
Reading and analyzing financial statements is one of the most important tasks of Equity Analysts which look at a company from a fundamental perspective.  However, analyzing a company and its financial statements is much more than just reading the absolute dollar figures provided in financial statements: You need to calculate financial ratios which can be compared over multiple periods and companies to be able to gauge the development of a company over time and compare it to its competitors. For instance, for an Equity Analyst, the absolute dollar figures of a company's operating profit is less important than the ratio of the operating profit to revenue, which is called the operating margin.  Another very important figure is Free Cash Flow which can be set in relation to sales (= Free Cash Flow / Sales).  The following working capital related metrics can be used as a health check for a company and give you early warning signs when they deviate too much: You can either calculate those metrics yourself using a spreadsheet (e.g. Excel) or use a professional solution, e.g. Bloomberg Professional, Reuters Eikon or WorldCap.
The IRR is the Discount Rate r* that makes Net Present Value NPV(r*)==0. What this boils down to is two ways of making the same kind of profitability calculation.  You can choose a project with NPV(10%)>0, or you can choose based on IRR>10%, and the idea is you get to the same set of projects.  That's if everything is well behaved mathematically. But that's not the end of this story of finance, math, and alphabet soup. For investments that have multiple positive and negative cash flows, finding that r* becomes solving for the roots of a polynomial in r*, so that there can be multiple roots.  Usually people use the lowest positive root but really it only makes sense for projects where NPV(r)>0 for r<r* and NPV(r)<0 for r>r*.   To try to help with your understanding, you can evaluate a real estate project with r=10%, find the sum future discounted cash flows, which is the NPV, and do the project if NPV>0.   Or, you can take the future cash flows of a project, find the NPV as a function of the rate r, and find r* where NPV(r*)==0. That r* is the IRR.  If IRR=r*>10% and the NPV function is well behaved as above, you can also do the project. When we don't have to worry about multiple roots, the preceding two paragraphs will select the same identical sets of projects as meeting the 10% return requirement.
Hey mate, You haven't shared enough details for me to be more specific, but what you might want to do is pretty simple. Fact is that 80% of all financial models are the same. The only thing that is different is the revenue forecasts. Only v few people have the 80% done already ;) If you say service business and mean you are basically a consultancy, this is pretty simple. - Rev - forecasts # clients per month. What is ave rev per client? (Guess what is reasonable... call someone who has done before and buy coffee- mind rape them for data points!!!!) Times the two. That's your rev. Get fancy and you can differentiate to when you book and bill revenue etc. - Staff - what is the contribution of staff per projects. You could say 40% of a dev per client and 20% of a designer. Times the staff contribution with a roundup function (you can't employ 40% of a person) against the # of projects. That tells you staff requirement depending on projects you get. You need to know the average project lengh though. You can hack this but the formulas to automate are not simple (I did this for the enterprise sales model i made) - Expenses - you have rent, utilities, server costs etc. You have fixed and variable. So say 400 pm per person. so times the variable by the # staff. Add the fixed base and you have the expenses. - Marketing - where do customers come from? If you are doing direct sales as founder, then simple. It's just your salary cost. You can make more complicated as you get bigger. - P&amp;L - you pull all this shizzle into a rev, less costs = profit...loss. Your staff costs are what will kill you. Well, if you close enough deals who cares ;) It's taken me years to be proficient at this. I knew nothing when I started. You can learn it just takes time. Having resources to rip off is a good place to start.
To figure this out, you need to know the price per share then vs the price per share now.  Google Finance will show you historical prices.  For GOOG, the closing price on January 5, 2015 was $513.87.  The price on December 31, 2015 was $758.88.  Return on Investment (ROI) is calculated with this formula: ROI = (Proceeds from Investment - Cost of Investment) / Cost of Investment Using this formula, your return on investment would be 47.7%.  Since the time period was one year, this number is already an annualized return.  If the time period was different than one year, you would normally convert it to an annualized rate of return in order to compare it to other investments.
"Equity does not represent production divisions in a company (i.e. chocolate, strawberry, and vanilla does not make sense).  In Sole proprietorship, equity represents 1 owner.  In Partnership, equity has at least two sub-accounts, namely Partner 1 and Partner 2.  In Corporations, equity may have Common Stockholders and Preferred Stockholders, or even different class of shares for insiders and angel investors.  As you can see, equity represents who owns the company. It is not what the company does or manufactures.  First and foremost, define the boundary of the firm. Are your books titled ""The books of the family of Doe"", ""The books of Mr & Mrs Doe"", or ""The books of Mr & Mrs Doe & Sons"".  Ask yourself, who ""owns"" this family. If you believe that a marriage is perpetual until further notice then it does not make any sense to constantly calculate which parent owns the family more. In partnership, firm profits are attributed to partner's accounts using previously agreed ratio. For example, (60%/40% because Partner 1 is more hard working and valuable to the firm.  Does your child own this family? Does he/she have any rights to use the assets, to earn income from the assets, to transfer the assets to others, or to enforce private property rights? If they don't have a part of these rights, they are certainly NOT part of Equity.  So what happens to the expenses of children if you follow the ""partnership"" model? There are two ways. The first way is to attribute the Loss to the parents/family since you do not expect the children to repay. It is an unrecoverable loss written off. The second way is to create a Debtor(Asset) account to aggregate all child expense, then create a separate book called ""The books Children 1"", and classify the expense in that separate book.  I advise using ""The family of Doe"" as the firm's boundary, and having 1 Equity account to simplify everything. It is ultimately up to you to decide the boundaries."
When it comes to decision-making, you could ""own"" one percentage of the company in terms of votes, but when it comes to shares of future profits, you could own a different amount. This is why you can have voting and non-voting versions of a company's stock, for example. So this is a critical point - the ownership of a company is independent of the individual contributions to the company. The next part of your question is related to this: what happens when CorpTech sees an opportunity to make an investment? If it has enough cash on hand (because of the initial investment, or through financing, or reinvested profits), then the decision to make the investment is made according to Albert and Brian's ownership agreement, and they spend it. The money doesn't belong to them individually anymore, it belongs to CorpTech, and so CorpTech is spending it. They are just making the decision for CorpTech to spend it. This is why people say the owners are not financially liable beyond their initial investment. If the deal is bad, and they lose the money, the most they can lose is what they initially put in. On the other hand, if CorpTech doesn't have the money, then they have to figure out a way to get it. They might decide to each put in an amount in proportion to their ownership, so that their stake doesn't change. Or, Albert might agree to finance the deal 100% in exchange for a larger share of ownership. Or, he could agree to fund all of it without a larger stake, because Brian is the one who set the deal up. Or, they might take out a loan, and not need to invest any new money. Or, they might find an investor who agrees to put in the needed money in exchange for a a 51% share, in which case Albert and Brian will have to figure out how to split the remaining 49% if they agree to the deal.
As BrenBarn points out in his comment, the real values are inflation adjusted values using the consumer price index (CPI) included in the spreadsheet.  The nominal value adjusted by the CPI gives the real value in terms of today's dollars. For example, the CPI for the first month (Jan 1871) is given as 12.46 while the most recent month (Aug 2016) has a reported CPI of 240.45. Thus, the real price (in today's dollars) for the 4.44 S&P index level at Jan 1871 is calculated as 4.44 x 240.45 / 12.46 = 85.68 (actually reported as 85.65 due to rounding of the reported CPIs).  And similarly for the other real values reported.
The preparation for starting up of the company has lasted already more than 2 years. Let's say the company starts officially in January next year. So, in January 2014... 8 million USD is invested to purchase the equipments and the company will start selling their prdocuts right away. Imagine the company will be selling the same amount of products each year at the same price for 5 years. After 5 years it will sell the equipments for 6 million USD and cease to exist. The depreciation of  equipments is divided into those 5 years. So, each year the depreciation of equipments is 400.000 USD. In despite of this, the company will make 500.000 USD per year as a profit before tax.  So, the equipments are bought in Januardy 2014 (first month of the existence of the company) and sold in December 2018 (last month of the existence of the company). This is the NPV that I calculated. Is it correct?
I have found a good explanation here: http://www.contracts-for-difference.com/Financing-charge.html Financing is calculated by taking the overall position size, and multiplying it by (LIBOR + say 2%) and then dividing by 365 x the amount of days the position is open. For instance, the interest rate applicable for overnight long positions may be 6% or 0.06. To calculate how much it would cost you to hold a long position for X number of days you would need to make this 'pro rata' meaning that you would need to divide the 0.06 by 365 and multiply it by X days and then multiply this by the trade size. So for example, for a trade size of $20,000, held for 30 days, the interest cost would be about $98.6. It is important to note that due to financing, long positions held for extended periods can reduce returns.
"Re. question 2 If I buy 20 shares every year, how do I get proper IRR? ... (I would   have multiple purchase dates) Use the money-weighted return calculation: http://en.wikipedia.org/wiki/Rate_of_return#Internal_rate_of_return  where t is the fraction of the time period and Ct is the cash flow at that time period. For the treatment of dividends, if they are reinvested then there should not be an external cash flow for the dividend.  They are included in the final value and the return is termed ""total return"".  If the dividends are taken in cash, the return based on the final value is ""net return"". The money-weighted return for question 2, with reinvested dividends, can be found by solving for r, the rate for the whole 431 day period, in the NPV summation. Now annualising And in Excel"
Ap = {(n*Ai) Where ({) is sigma (sorry for such weird typing, haven't figured out yet how to type proper-looking formulas), (n) - share of 'i'th security in portfolio. So another way of stock-picking is ranking securities by their excess return to beta (ERB): ERB = (Ri - Rf)/Bi The greater the ERB the more desirable the security and the greater the proportion it will make up of the portfolio. Thus portfolios produced by this technique will have greater proportion of some securities than the market portfolio and lower proportions of other securities. The number of securities depends on a cut-off rate (C*) for the ERB, defined so that all securities with ERB>C* are included in portfolio while if ERB The cut-off rate for a portfolio containing the first 'j' securities is given by (i'm inserting an image cut from Word below): Here comes the tricky part: Basically what you do is first calculate ERB for each security, then calculate Cj for each security mix (gradually adding new securities one by one and recalculating Cj each time). Then you select an optimum portfolio by comparing Cj of each mix to ERB's of it's securities. Let me show you a simple example: Say you have securities A,B,C and D you calculated ERB's: ERB(a)=6, ERB(b)=6.5, ERB(c)=5, ERB(d)=4 also you calculated: C(a)=4.1, C(ab)=4.8, C(abc)=4.9, C(abcd)=4.5. Then you check: ERB(a),ERB(b),ERB(c) are greater than C(a), but C(a) only contains security A so C(a) is not an optimum mix.
generally Forward P/E is computed as current price / forward earnings.  The rationale behind this is that buying the stock costs you the current price, and it gives you a claim on the future earnings.
You haven't mentioned how much debt your example company has. Rarely does a company not carry any kind of debt (credit facilities, outstanding bonds or debentures, accounts payable, etc.) Might it owe, for instance, $1B in outstanding loans or bonds? Looking at debt too is critically important if you want to conduct the kind of analysis you're talking about.  Consider that the fundamental accounting equation says: or, But in your example you're assuming the assets and equity ought to be equal, discounting the possibility of debt.  Debt changes everything.  You need to look at the value of the net assets of the company (i.e. subtracting the debt), not just the value of its assets alone. Shareholders are residual claimants on the assets of the company, i.e. after all debt claims have been satisfied.  This means the government (taxes owed), the bank (loans to repay), and bondholders are due their payback before determining what is leftover for the shareholders.
One aspect of this - no matter which valuation method you choose - is that there are limited shares available to buy. Other people already know those valuation methods and have decided to buy those shares, paying higher than the previous person to notice this and take a risk. So this means that even after you have calculated the company's assets and future growth, you will be possibly buying shares that are way more expensive and overvalued than they will be in the future. You have to consider that, or you may be stuck with a loss for decades. And during that time, the company will get new management or their industry will change, completely undermining whatever fundamentals you originally considered.
PE ratio is the current share price divided by the prior 4 quarters earnings per share. Any stock quote site will report it. You can also compute it yourself. All you need is an income statement and a current stock quote.
International Business Machines Corp - Graham Ratings Sales | Size (100% ⇒ $500 Million): 18,558.60% Current Assets ÷ [2 x Current Liabilities]: 62.40% Net Current Assets ÷ Long Term Debt: 28.00% Earnings Stability (100% ⇒ 10 Years): 100.00% Dividend Record (100% ⇒ 20 Years): 100.00% Earnings Growth (100% ⇒ 30% Growth): 172.99% Graham Number ÷ Previous Close: 35.81% Not all stocks failing Graham's rules are necessarily bad investments. They may fall under ""special situations"". Graham's rules are also extremely selective. Graham designed and backtested his framework for over 50 years, to deliver the best possible long-term results. Even when stocks don't clear them, Graham's rules give a clear quantifiable measure of a stock's margin of safety. Thank you."
"The main thing is the percentage of the company represented by the shares. Number of shares is meaningless without total shares. If you compute percentage and total company value you can estimate the value of the grant. Or perhaps more useful for a startup is to multiple the percentage by some plausible ""exit"" value, such as how much the company might sell for or IPO for. Many grants expire when or soon after you leave the company if you don't ""cash out"" vested shares when you leave, this is standard, but do remember it when you leave.  The other major thing is vesting. In the tech industry, vesting 1/4 after a year and then the rest quarterly over 3 more years is most common."
There are a variety of ways to do this... the easiest is just to compare your car's expected value to your loan balance every time. In cell I3, type =(D3-E3). That's your initial equity in the car before making any payments. Copy that cell and paste it to I4. You'll see it updates to =(D4-E3) automatically. (Right now that is zero... those cells are empty, but we're getting there) The important thing is that as JB King pointed out, your equity is a function of accumulated principal AND equity, which depreciates. This approach handles those both. Finishing up the copy-and-paste formulas I know this is long, but we're almost done. Rate // Period 1 In cell C4 type =C3. Payment // Period 1 In cell F4 type =F3. Loan Balance // Period 1 In cell E4 type =E3-H4. Your loan balance at the end of period is reduced by the principal you paid. I get 10,641. Car Value // Period 1 This will vary depending on how you want to handle depreciation. If you ignore it, you're making a major error and it's not worth doing this entire analysis... just buy the prettiest car and move on with life. But you also don't have to get it scientifically accurate. Go to someplace like edmunds.com and look up a ballpark. I'm using 4% depreciation per year for the old (12K) car and 7% for the newer car. However, I pulled those out of my ass so figure out what's a better ballpark. In G1 type ""Depreciation"" and then put 4% in H1. In O1 type ""Depreciation"" and then 7% in P1. Now, in cell D4, put the formula =D3 * (1-(H$1/12)).
To get the probability of hitting a target price you need a little more math and an assumption about the expected return of your stock.  First let's examine the parts of this expression. IV is the implied volatility of the option.  That means it's the volatility of the underlying that is associated with the observed option price.  As a practical matter, volatility is the standard deviation of returns, expressed in annualized terms.  So if the monthly standard deviation is Y, then Y*SQRT(12) is the volatility. From the above you can see that IV*SQRT(DaysToExpire/356) de-annualizes the volatility to get back to a standard deviation.  So you get an estimate of the expected standard deviation of the return between now and expiration. If you multiply this by the stock price, then you get what you have called X, which is the standard deviation of the dollars gained or lost between now and expiration.  Denote the price change by A (so that the standard deviation of A is X). Note that we seek the expression for the probability of hitting a target level, Q, so mathematically we want 1 - Pr( A < Q - StockPrice)  We do 1 minus the probability of being below this threshold because cumulative distribution functions always find the probability of being BELOW a threshold, not above. If you are using excel and assuming a mean of zero for returns, the probability of hitting or exceeding Q at expiration, then, is That's your answer for the probability of exceeding Q. Accuracy is in the eye of the beholder.  You'd have to specify a criterion by which to judge it to know the answer.  I'm sure more sophisticated methods exist that are more unbiased and have less error, but I think it's a fine first approximation.
Since you are trying to compare corporate bonds that have a defined coupon over the specified time of the bond. Why not use a simple Net Present Value (NPV) calculation. Refer: Net Present Value (NPV) You could use the discounting factor as the current repo rate of your central bank. As I said, this would be a simple fast measure (not considering risk rating of the bonds, inflation and other considerations). Take a notional 1000 as invetment in each instrument and calculate the NPV, higher it is better the investment. Another method, in terms of percentage return would be Internal rate of Return (IRR). Though the calcualtionis a bit more complicated, it would give you a percentage figure. Note, the above 2 measures are used when the cashflow over the time period is known. It will not work for instruments where the cashflow/value over different time are not known. Like stocks.