Cash flow measures how money moves through a business. This tag explains its importance in evaluating financial health and long-term sustainability.
Free cash flow yield is a valuation metric that compares a company’s free cash flow to its stock price or market value. Free cash flow yield shows how much cash a company generates for each dollar investors pay for the stock. In fundamental investing, it helps investors evaluate whether a stock is cheap or expensive
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Owner earnings is an estimate of the cash a business can generate for its owners after accounting for the spending needed to maintain its competitive position and operating capacity. In fundamental investing, owner earnings is often used as a more practical measure of business value than accounting earnings. It focuses on the cash that could
Terminal value is the estimated value of a business beyond the explicit forecast period in a valuation model. In a discounted cash flow (DCF) model, investors usually forecast a company’s free cash flow for a specific number of years, such as 5 or 10 years. Terminal value estimates what the business may be worth after
Capitalization rate, often called cap rate, is a valuation and return metric that compares an asset’s income to its value or price. In real estate, capitalization rate is commonly used to estimate the return on an income-producing property. In stock investing, the same concept can be used to value a stable income stream, such as
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A DCF model, short for discounted cash flow model, is a financial model used to estimate the value of a business, stock, project, or investment based on the present value of its expected future cash flows. In fundamental investing, a DCF model is commonly used to estimate a company’s intrinsic value. The model forecasts how
Discounted cash flow, often called DCF, is a valuation method used to estimate what an investment is worth based on the present value of its expected future cash flows. In fundamental investing, a discounted cash flow analysis helps investors estimate the intrinsic value of a business. The basic idea is that a company is worth
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Intrinsic value is an estimate of what an investment is truly worth based on its underlying fundamentals, rather than its current market price. For a stock, intrinsic value is usually calculated by analyzing a company’s future cash flows, earnings power, assets, growth potential, competitive advantage, and risk. Investors compare intrinsic value to the stock’s market
The discount rate, net present value (NPV), and internal rate of return (IRR) are foundational concepts in finance and investing. While they can seem complex at first, they are all built on a simple idea: The value of an investment depends on the present value of its future cash flows. Understanding how these concepts work
The time value of money is one of the most important concepts in finance and investing. At its core, it reflects a simple idea: A dollar today is worth more than a dollar in the future. This is because money available today can be invested to earn a return, making it more valuable than the
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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
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