In a recent article in The Wall Street Journal titled You’re More Like Warren Buffett Than You Think, financial journalist Spencer Jakab highlighted what I believe to be one of Warren Buffett’s most important, and certainly most overlooked, competitive advantages: Buffett has permanent capital with which to invest. This is not the case for managers […]
The Edge of Individual Investors – Permanent Capital Read More »
If I had to choose a single metric to track the health of a business, that metric would be return on invested capital (ROIC). This metric helps answer what I believe is the single most important question in business: can the business earn a fair return on the financial capital that is placed in it?
What is the Best Financial Metric? Read More »
The time value of money is a concept in finance that states that money received in the future is worth less than money received in the present. The difference in value between current and future money is due to the interest that could be earned on the present amount. In other words, the discount between
Time Value of Money Read More »
Introduction Real estate is an “other people’s money” (OPM) business, and commercial real estate investors often spend a significant amount of time raising capital for individual deals. This capital comes in two forms: debt and equity. In this post, we will look at how commercial real estate investors raise both equity and debt capital. Equity
Introduction to Commercial Real Estate Part 5: Financing the Deal Read More »
Working capital is the difference between a company’s current assets and current liabilities. Working capital is calculated by subtracting current liabilities from current assets. Working capital is a liquidity measure in that it indicates the amount of resources available to satisfy short-term obligations. Financial managers and investors often distinguish between total working capital and operating
Introduction Due diligence is one of, if not the, most important periods in the real estate investment process. It is during the due diligence phase that the investor looks for any factors which can change the financial merits of the purchase. These factors may prompt the investor to either renegotiate terms with the seller or
Introduction to Commercial Real Estate Part 4: Due Diligence Read More »
I don’t frequently do book reviews, but occasionally a book is published that is so closely aligned with the Fundamental Investing Institute’s mission of educating and empowering entrepreneurs and individual investors that I would be remiss not to comment on it. Codie Sanchez’s book, Main Street Millionaire: How to Make Extraordinary Wealth Buying Ordinary Businesses
Review of Codie Sanchez’s Main Street Millionaire Read More »
Unearned revenue is a current liability account that represents money collected from customers before goods have been delivered or services have been performed. When a company receives payment from customers for goods or services not yet delivered, the company will initially record the payment on the balance sheet as a current liability. The payment is
Treasury stock represents stock shares that a company had issued and then later repurchased. Treasury stock reduces the number of shares a company has outstanding. Companies often repurchase outstanding shares for three primary reasons. First, a company’s management may believe that the shares are undervalued and thus represent a good investment. Second, a company that
A subsidiary company is a company that is majority owned by another entity. The entity which owns the subsidiary company is called the parent company. A subsidiary may be wholly owned or partially owned. A wholly owned subsidiary is a subsidiary company where all of the outstanding shares are owned by the parent company. A
Subsidiary Company Read More »
