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Articles on Trending Technologies
Technical articles with clear explanations and examples
How to use Cash Flow Approach for Capital Structure Analysis?
One of the most commonly used methods for the valuation of capital structure is the analysis of cash flows from the operations of the business. Cash flows are of the following three types −Operating Cash FlowsNon-operating Cash FlowsFinancial FlowsOperating Cash FlowsThese are related to the operations of a firm and can be obtained from the profit and loss statements of the firm. To calculate operating cash flows, net operating volume, sales, and the input/output prices over a given period are used.Non-operating Cash FlowsIt generally includes working capital changes and capital expenditure. For example, in times of recession, the firms may ...
Read MoreWhat is Operating Risk in Finance?
Operating risk is associated with a company’s cost structure. It is the risk a company faces due to the level of fixed costs in the company’s operations. As the name suggests, operating risks are associated with the operations of the business. This may include risks due to failure of fixed assets or unpredictable operational risks that cannot be foreseen.Business risks are of two types − Operating risk and Sales risk.Operating risk is related to the cost structure and fixed costs of a company.Sales risk is the risks associated with the loss of revenue due to fewer goods and services sold.Fixed ...
Read MoreWhat is Operating Leverage?
Operating leverage is a tool that measures a company’s fixed costs as a percentage of its overall costs. It is often used to evaluate the breakeven point of a business and the profit from overall sales. When expressed as the degree of operating leverage (DOL), it represents a financial ratio that calculates the sensitivity of a company’s operating income to its sales. As such, the DOL is a financial metric that shows how a change in the company’s sales will affect the company’s operating income.High Operating LeverageIn the case of high operating leverage, a large portion of a company’s costs ...
Read MoreWhat are the Types of Financial Risks?
Financial risk refers to a condition where a company with a certain amount of debt will fail to repay them in a given time period. In other words, financial risk means the risk of losing money by investing it in a lossmaking company.Investors usually remain averse to risky companies and hence calculating the financial risk is of paramount importance to them. In general, the more debt a company has, the more will be its financial risk.Types of Financial RisksFinancial risks can lead to loss of shareholders’ income, as the money is lost while carrying on with a loss-making company. However, ...
Read MoreFactors that Determine the Capital Structure of a Company
Meaning of Capital StructureCapital Structure is the ratio of different types of securities raised by a firm as its long-term finance. Capital structure decision involves two philosophies −Type of securities to be issued in capital structures must be equity shares, preference shares, and long-term borrowings (Debentures).Relative ratio of the securities can be obtained by the process of capital gearing. On the basis of gearing, the companies are divided into two categories −Highly geared companies – The companies which have a proportion of equity capitalization that is small.Low geared companies – The companies the equity capital of which is high in ...
Read MorePayback Period as a Method of Handling Investment Risk
Payback period or simply payback in capital budgeting refers to the time required for the ROI (Return on Investment) to repay the original sum of investment.Payback is a preferred tool because it is easy to understand and apply, irrespective of whether the manager is aware of financial calculations or not.Payback is an effective tool to derive the worth of an investment when similar projects are compared.The payback method is a simple tool to measure the months or years it takes to repay the initial investment of a project.The payback method doesn’t have any specific criteria for the evaluation of investments ...
Read MoreWhat is Dynamic Testing? (Types, Techniques, Example)
Dynamic TestingIn software testing, dynamic testing is a method or technique performed to test the dynamic behavior of the software code. This testing is performed mainly to test the behavior of the software product with dynamic variables or variables that are not constant and to detect the weak or vulnerable areas in the software runtime environment. The software code should be executed to test the dynamic behavior of the software product.Testing takes 2 Vs to complete the testing process and combines verification and validation. Of these 2 Vs, verification is known as static testing, and validation is referred to as ...
Read MoreProject Management Life Cycle Phases
What is a Project Management Life Cycle?The Project Management Life Cycle is a set of tasks that must be completed in order for a project's goals or targets to be met. It's a structure that outlines the steps involved in turning an idea into a reality. Projects may have various dimensions and degrees of complexity, but they can all be mapped to the Project Management life cycle framework, regardless of their size.What is a Project Management Life Cycle, and how does it work?Phases of the Project Management Life CyclePhase One: BeginPhase of PreparationPhase of ExecutionPhases of monitoring, controlling, and closingPhases ...
Read MoreTest Case vs Test Scenario – What's the Difference?
What does the Test Case entail?A test case is a set of criteria that a tester uses to verify whether or not a software application is meeting the customer's requirements.Preconditions, case name, input conditions, and intended outcome are all included in the test case design. A test case is a basic activity that is derived from test scenarios.It is a comprehensive document that comprises all potential inputs (both positive and negative) as well as navigation instructions for the test execution process. Writing test cases is a one-time effort that may be reused for regression testing in the future.The test case ...
Read MoreSoftware Testing Techniques with Test Case Design Examples
What are the different types of software testing techniques?Software Testing Techniques assist you in creating more effective test cases. Manual Testing Techniques help reduce the number of test cases to be executed while increasing test coverage because exhaustive testing is not possible. They aid in the detection of test circumstances that might otherwise be difficult to detect.Boundary Values Analysis (BVA)Boundary value analysis is a type of testing that takes place at the intersections of partitions. Maximum, minimum, inside or outside boundaries, typical values, and error values are all included.The limits of the defined input values, rather than the center, are ...
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