Value Creation & Destruction

Initial Public Offering (IPO)

The process by which a privately held company offers shares to the public for the first time.

Stock Price

The cost of purchasing a share of a company, which can fluctuate based on market conditions, facts, and investor behavior.

Initial Public Offering (IPO)

The process by which a privately held company offers shares to the public for the first time.

Stock Price

The cost of purchasing a share of a company, which can fluctuate based on market conditions, facts, and investor behavior.

Market Capitalization (Mkt cap)

The total market value of a company's outstanding shares, calculated by multiplying the stock price by the number of shares outstanding.

Dividend Yield

A financial ratio that shows how much a company pays out in dividends each year relative to its stock price.

Earnings Per Share (EPS)

A financial metric that indicates a company's profitability by dividing net income by the number of outstanding shares.

Beta

A measure of a stock's volatility in relation to the overall market; a higher beta indicates greater risk.

Behavioral Finance

A field of finance that suggests psychological factors influence investor behavior and market outcomes.

Value Creation

The process of increasing the worth of an asset or a company, typically through strategic investments and effective management.

Value Destruction

The decrease in the worth of a company or asset, often caused by poor management decisions or market conditions.

Capital Budgeting

The process of planning and managing a firm's long-term investments, determining which projects will yield the most return.

Stakeholder Conflicts

Disagreements among various parties interested in or affected by a company's operations, which can impact its value maximization.

Financial Policy

The strategy a company uses to manage its finances, including investment, financing, and dividend strategies.

Investment Policy

Guidelines that dictate how a firm makes investment decisions to maximize value.

Payout Policy

A company's strategy regarding the distribution of cash to shareholders, through dividends or share repurchases.

Corporate Governance

The system by which companies are directed and controlled, including the relationships among stakeholders.

Cash Flow

The total amount of money being transferred into and out of a business, affecting its liquidity.

Efficient Markets Hypothesis

The theory that asset prices reflect all available information, making it impossible to consistently achieve higher returns without additional risk.