Finance Fundamentals
Amount of money a company earns from selling products or services.
What is Revenue?
This valuation method estimates a company's value by comparing it to similar publicly traded companies.
What is Relative Valuation?
This employer-sponsored retirement account allows employees to contribute part of their paycheck toward retirement.
What is 401(k)?
A share of this represents partial ownership of a company.
What is stock/equity?
AAPL
What is Apple?
Measures a company's profit after all expenses, interest, and taxes.
What is Net Income
This valuation method estimates the present value of a company's expected future cash flows.
What is DCF (Discounted Cash Flow)
This type of retirement account is opened by an individual rather than through an employer.
What is an IRA?
This investing strategy involves spreading investments across different companies, industries, or asset classes to reduce concentration risk.
What is Diversification?
GS
What is Goldman Sachs?
Earnings Before Interest, Taxes, Depreciation, and Amortization.
What is EBITDA
In a DCF, this rate is used to convert future cash flows into today's dollars.
What is the Discount Rate
This retirement account allows you to contribute money that has already been taxed, with qualified withdrawals generally being tax-free.
What is a Roth IRA?
This measures how much a stock's price has moved relative to the overall market.
What is Beta?
DUOL
What is Duolingo?
Earnings/Shares Outstanding
What is EPS (Earnings Per Share)
A company trades at $50 per share and has EPS of $5. What is its P/E ratio?
What is 10x?
What is one major difference between a traditional IRA and a Roth IRA?
What is taxes?
If you invest $1,000 and it grows by 10%, then grows another 10%, your ending value is this.
What is $1,210?
FSLR
A company has $100 million in revenue and $20 million in net income. If revenue increases to $120 million while net income increases to $24 million, what happens to its net profit margin?
What is nothing — it stays at 20%?
Company A earns $5 per share and trades at $50. Company B earns $5 per share and trades at $100. Which company has the higher P/E ratio?
What is Company B, at 20×?
You are young and expect your income to increase significantly over your career. Why might someone consider a Roth IRA for long-term investing?
What is because you pay taxes on the money now and qualified withdrawals later are generally tax-free?
A company can grow revenue rapidly but still be a poor investment if investors are already paying this.
What is too high a valuation / an excessive price?
FTAI
What is FTAI Aviation?