17. Who issues Bonds?

Equity - or public equity in the form of stocks is issued by companies. Not only companies can borrow - and not only companies can borrow through securitised debt.

16. Private Equity, IPO, Public Equity

Equity can either be private or public and these terms are often used in the press. In the transition from the former to the latter there is typically an IPO. Public equity is also known as stocks or shares.

15. The Capital Structure of a Company

This video highlights what is spoken about when we talk about the capital structure of a company - effectively the structure of that company's financing, which is very tied to the right side of that company's balance sheet - for the book values, as well as the market values of the items on the right side of the balance sheet.

14. What is a Bond?

Bonds are pieces of debt of companies or governments and this brief video details further what a bond is.

Everyone should know what a stock and a bond are - this video gives a quick intro to that. What stocks and bonds are has a lot to do with how providers of capital interact with users of capital (through equity (which includes stocks for many large companies)) and debt (which includes bonds for many large users of capital).

*** New Video: V4. The EV/EBITDA Ratio

In order to address some of the shortcoming of the P/E Ratio - or at a minimum, try to provide additional information, another ratio that is very commonly used used is the EV/EBITDA ratio. Like the P/E ratio, this ratio uses one year of data and tries to establish a relationship between the value of the company and some measure of profitability. In order to adjust for the fact the earnings are influenced by interest cost, tax charges, depreciation and amortization - none of of which is directly linked to the operations of the company, this ratio compares this to the Enterprise Value of the company, which is the Market Capitalization (the market value of the equity (P x number of shares)) plus the net debt (debt - cash).

This measure therefore compares a broader measure of the company's value - one which includes net debt which an acquirer would have to assume, and compares it to EBITDA - a measure of the operating earnings of the company, thereby neutralizing the effect of varying interest levels between companies and depreciation policies. The EBITDA measure is not perfect, but clearly one can argue that it 'cleans' the earnings to provide a number that is more reflective of the operating performance of the company.

The drawback that it only looks at one year's worth of data remains.

13. What is a Stock?

Everyone should know what a stock and a bond are - this video gives a quick intro to that. What stocks and bonds are has a lot to do with how providers of capital interact with users of capital (through equity (which includes stocks for many large companies) and debt (which includes bonds for many large users of capital).

12. Links between the Financial Statements

Each of the three financial statements captures different aspects of a companies financial situation - about operations as a going concern (Income Statement), about actual cash flows - also going beyond Operations to include Investing and Financing (Cash Flow Statement) and the assets and liabilities of the company (Balance Sheet).

Therefore it only makes sense that some links exist between all the three statements - income and cash flows for example, income over a year that is not paid out as dividends and change in assets etc.

Having an appreciation of these links is a clear indication that conceptually the 3 financial statement have become clear.

*** New Video: 15. The Capital Structure of a Company

This video highlights what is spoken about when we talk about the capital structure of a company - effectively the structure of that company's financing, which is very tied to the right side of that company's balance sheet - for the book values, as well as the market values of the items on the right side of the balance sheet.

11. The Cash Flow Statement

The cash flow statement is typcally the 3rd of the 3 financial statements found in an Annual Report. This video provides an overview.

10. What is a Balance Sheet

The Balance Sheet is one of the 3 main financial statements for companies, and it captures the assets, the equity and the debt at a certain point in time - like the end of the year. And it balances.

*** New Video: V2C. The P/E to Growth Ratio

One of the shortcomings of the P/E ration is that it does not reflect the fact that some companies have higher P/Es than others (in particular in the year that might be being looked at) than another, but might also have higher earnings growth. With higher earnings growth, a company with a high P/E on next year's earnings might have a much lower P/E on a future year's earnings given that the 'E' would have grown to be much higher then.

In order to incorporate, normalize and adjust for differences in earnings growth, the P/E to growth ratio is often used.

It adds information and is another commonly used ratio - it does not address all of the shortcomings of using P/Es.

9. What is an Income Statement

There are 3 main account statements for companies - the income statement, the balance sheet and the cash flow statement. This video in on the first of these - the income statement.

** New Video: 12. Links between the Financial Statements

We are happy to announce a new video, focusing on the following:

Each of the three financial statements captures different aspects of a companies financial situation - about operations as a going concern (Income Statement), about actual cash flows - also going beyond Operations to include Investing and Financing (Cash Flow Statement) and the assets and liabilities of the company (Balance Sheet).

Therefore it only makes sense that some links exist between all the three statements - income and cash flows for example, income over a year that is not paid out as dividends and change in assets etc.

8. Debt Consolidation - savingandinvesting.com

Some of the principles behind consolidating your debt explained in a simple manner - in general, consolidating debt is something one should consider as a tweak to lower interest payments. Racking up huge debts on credit cards or in general as a percentage of one's net wort is a terrible idea right from the start.

7. High Credit Card Interest Rates

There are reasons which make credit card interest rates so high. High credit card interest rates make having this kind of debt a bad idea especially if we let it compound to buy things that quickly lose their value.

6. Borrowing Money

A brief simple video on why certain interest rates are higher (for example credit card rates) and others that have collateral against them lower.

5. Principles of Leverage - savingandinvesting.com

A follow on from 'What is Leverage?' looking at some of the principles surrounding leverage.

4. What is Leverage? - savingandinvesting.com

Leverage explained in very simple terms - what it is and how it works.

3. Providers and Users of Capital: Equity and Debt

There a 2 main ways for providers and users of capital to interact - this video provides more information on this.

2. Providers and Users of Capital

It is the interaction between providers and users of capital that forms the basis of our financial system. It is that which allows our money to grow and for companies and governments to have access...

1. Compounding

This is the first video in the series - very important.

An introduction to what has been called the 8th wonder of the world - compounding. The principle that allows small sums to grow to large sums over time.

I7. 5 Popular Misconceptions Part 2

There are many misconceptions around saving and investing, and even how difficult it is (or is not). Here are some (Part 2).

I6. 5 Popular Misconceptions Part 1

Saving and investing seems to have more than its deserved share of negative connotations. That might be because of a few popular misconceptions - here are 5 that I think are out there and fairly significant.

I5. Starting with the Right Thing - savingandinvesting.com

When we start to think about saving and investing, the best place to start is with knowledge - certainly better to start with knowledge than to start by making decisions.

I4. Why the Subject is so Important!

Getting back to the series - after the announcement of an additional video (6. Borrowing Money) - this is the fourth of the introductory videos.

Best Regards,

Michael

6. Borrowing Money

A new video has been added on the Saving and Investing channel regarding borrowing money.

Best Regards,

Michael

I3. My Background

Some introductory information on my background and why this material is so important and I felt strongly about communicating some of this information.

SavingandInvesting.com

This month we are going to run a video a day on the savingandinvesting blog in a logical series because some of the newer ones actually fill in additional detail and give context to the earlier ones.

This is the second video (logically) in the series.

1. Introduction - by savingandinvesting.com

This is the first of two introductory videos - it was one of the first ones recorded and def. a bit different hopefully than the rest - nonetheless it gives an idea as to what this whole thing is supposed to be about. Thanks for watching.