Industry Profit Pools can be defined as the collective profits accrued at every stage along the value chain within an industry. Profit pools differ from profit margins, which focus on individual companies. Profit pools simply indicate where the real money flows within an industry. The concept was first introduced by Orit Gadiesh and James Gilbert,… Continue reading
What is Common Size Analysis? Common Size analysis is an accounting method used to measure each line item on the financial statements as a percentage of a base or common figure. For example, Revenue is often used as the base figure on the income statement. This means that all the line items such as cost… Continue reading
Working Capital is the cash needed for a business to carry on operating and covering short-term obligations. Understanding a business’s Working Capital needs is a great way to measure the near-term liquidity and risk factors of a business to carry on day-to-day activities. It can provide investors insights into the operating efficiency of the business… Continue reading
Cash Flow is the movement (flow) of money that comes in and out of a business. Money that moves out (Spent) is known as Cash Outflows while money that moves in (Received) is known as Cash Inflows. Cash Flow is different to earnings as it is a real snapshot of when a business receives money… Continue reading
Accounting Standards are guidelines and rules governing how corporations prepare and present their financial statements. These Standards ensure companies use the appropriate procedures and principles in their accounting methods. Without Accounting Standards, companies could report, present, and adopt any accounting method they choose which would always showcase their financial position and operations in the best… Continue reading
An Annual Report is a mandatory corporate document that outlines, breaks down and reflects the company’s financial position and operational activities for the previous financial year. It gives shareholders an insight into the management actions and how the company is performing in line with the strategy set out by the leadership team. What is the… Continue reading
To build a portfolio, you need to have a detailed plan that outlines the types of asset classes and returns necessary to achieve your goals. Once you have developed a strategy, you can allocate your capital across a diversified portfolio and then manage it. Building an investment portfolio has two stages – portfolio construction and… Continue reading
What is High Conviction and Concentrated Investing? High conviction and concentrated investing is a strategy that aims to identify and invest in companies that offer the highest potential for generating Alpha. This approach involves doubling down on an investor’s best ideas with the expectation of achieving above-average returns. A conviction investor holds a firmly held… Continue reading
A core-satellite strategy is a very popular approach to constructing a portfolio. The Investment strategy uses a mix of asset classes to create a diversified balance between long-term and short-term objectives. A core-satellite strategy is a great way to build an investment portfolio that can help to achieve the right risk-adjusted returns by blending both… Continue reading
Active vs Passive investing refers to two different investment strategies used by investors. Active investing involves the practice of individual security selection and implements a “hands-on” approach to investing. The aim is to beat a certain benchmark or look for absolute returns. Passive investing looks to match a certain benchmark and is a “hands-off” approach,… Continue reading
