TessMore Finance Blog

For companies, finance is one of the most crucial parts of operating. Usually, this finance comes from two sources, equity, and debt. Combined, they constitute a company’s capital structure.  This structure allows companies to decide the ratio between equity and debt finance. Companies can also obtain finance from other sources, for example, hybrid instruments, etc. Nonetheless, equity and debt finance are the most common sources. Equity finance comes from a company’s shareholders. For other businesses, the owners contribute funds, which constitute this finance source. This finance stays with the company perpetually. Usually, equity finance generates from the issuance of stock or shares. Debt finance, on the other hand, comes from lenders. These lenders include financial institutions. Companies can also generate this finance through debt instruments such as bonds. Undoubtedly, all companies require funds to perform their activities. Whether running a product- or service-based bus...

When buying a car, individuals will encounter various financing options. Usually, every car dealer, broker or supermarket offers a finance scheme. Each program comes with its advantages and disadvantages. Buyers can choose the option that best suits their needs.  Apart from those needs, a crucial factor in the decision is the costs associated with each scheme. Most buyers will aim to decrease or minimize those costs. The issue with various car financing options is that it creates confusion between buyers. Moreover, each source involves benefits and drawbacks, which can be confusing. The reason why various finance sources exist to fund car purchases is to provide buyers with variety. However, some options may also seek to exploit buyers and charge them extra. Therefore, they should steer clear of them. Sometimes, buyers may also find their dream car. However, the car dealership may refuse to sell them if they don’t use their in-house finance. Some buyers may wonder whether car dea...

Investors can choose between various investments in the market that can provide returns. Each of these assets comes with some risks as well. Usually, investors manage their portfolios themselves. However, some investors may also pool their funds together. This way, they can hire a manager to handle their investments. These investments may come in various forms, such as mutual or equity-traded funds. Investment management is the term used to describe professional services to manage investors’ assets. It may include various securities, including shares, bonds and other assets. Usually, each fund or pool comes with specific goals that benefit investors. These investors may consist of institutions or individuals. Another term used to describe investment funds is asset management. The process may differ between various pools. However, they usually have similar objectives. Investors can get returns from the typical asset investments. However, they can also make significant gains on alterna...

Investors looking to invest in various securities can do so individually. Usually, they can identify a market or investment class and acquire assets within it. By doing so, they can control their investments and trade when they want.  Moreover, investors can use apps or software that help them in the process. This process is accessible to anyone. Therefore, anyone can become an investor and start investing in different asset classes. However, some investors may not have the time or knowledge to make investing decisions. That does not exclude them from the process, though. Instead of indulging themselves, investors can rely on firms that invest for them. They can receive professional services, although they may lose some control. In that regard, investors can choose between various options. Investors prefer to obtain services from asset management and private equity firms. While they work similarly on the outside, they differ significantly due to their operations. Investors must k...

When choosing a career path, private equity firms are a great choice. Usually, these companies provide a clear and concise growth path that candidates can choose. On top of that, private equity firms can grow significantly in size over time. It allows most employees to grow with the company. On top of that, they can reach a higher position in their career than going for better options. However, cracking private equity interview questions can be critical to the process. In some cases, these questions may be more perplexing than those asked by public companies. Private equity interviews require technical knowledge, transaction experience, firm knowledge, and culture fit. On top of that, it can also include psychological questions that most candidates may find challenging to answer. A question asked during these interviews is why candidates want to work in private equity. This question is also common in other jobs for smaller and larger businesses. Usually, it confuses candidates into b...

A bond is considered a fixed-income debt instrument that provides finance to companies and issuers. In most cases, these instruments come with a fixed interest rate.  However, some may also come with a floating rate. Either way, bonds allow companies to raise finance. In exchange, it provides the investor with the right to receive interest based on the rate. This relationship allows both parties to benefit from the underlying instrument. Bonds include several terms, such as the coupon rate, maturity, face value, etc. These terms are a part of the bond indenture. Usually, these terms play a significant role in the relationship between the bond issuer and the holder.  The issuer drafts these terms in the bond indenture and provides them to a trustee. The trustee acts as an intermediary between both parties in this relationship. The accounting for bonds is also straightforward. These are financial instruments that allow companies to raise capital. In accounting, bonds fall unde...

A company’s capital structure represents the combination of equity and debt finance it uses. Usually, the former includes money collected from shareholders by issuing shares. These shares may consist of both ordinary and preferred stock. On top of that, equity also consists of retained earnings and other reserves. This finance source is long-term compared to debt finance. However, it may cause a dilution of ownership. Debt finance, in contrast, is money collected from third parties. More accurately, it is any financial obligation towards those parties. Those third parties may include suppliers, lenders, and other debt providers.  These parties may provide dedicated finance or credit terms based on their relationship. Furthermore, debt finance usually comes with a specific maturity period. Therefore, it lasts shorter than equity. For most companies, debt finance may be cheaper. The primary reason includes this finance source not diluting ownership. On top of that, debt finance req...

When investing in securities, investors may come across various terms that are relevant to the process. Some of these terms relate to the value of the underlying product in which they invest. Usually, they include face value, market value, par value, and several other terms. For most investors, these terms can be highly crucial in differentiating the returns and benefits they get. For an average investor, all the terms associated with pricing can be confusing. These terms can have several implications, which require an essential understanding of the prices. Similarly, these values can apply to various investments, including stocks and bonds.  However, they may have different meanings based on the underlying security to which they relate. In most cases, investors must understand two primary prices or values. These include the market value and par value of the underlying securities.  Through these values, they can determine the returns they can get or the price they will pay f...

The share price of a company’s stock may differ based on various factors. Usually, market participants and forces decide how much this stock is worth.  However, some internal factors may also play a role in establishing the price that shareholders will pay for it. When companies issue shares to the general public, they can decide how much they will charge. Once these shares get into the market, the market forces will determine the price. Any subsequent transfers of stock will have a different worth compared to the initial issue price.  However, the underlying company does not receive any compensation for it. The only amount that companies get is the initial payment they receive from shareholders. Any subsequent exchanges happen between holders only. The price that the market deems suitable for a company’s shares is known as the market price. This price can be highly critical in determining the stock’s worth. However, companies may also have a par value for their shares. This...

The information presented in a company’s financial statements can provide significant insights into its operations. For stakeholders, particularly shareholders and investors, this information can be significantly crucial. Of these financial statements, most stakeholders focus on the balance sheet, income statement, and cash flow statement. Sometimes, however, the information presented in these statements may not be sufficient. In those cases, stakeholders will need additional information on which they can base their decisions. In most circumstances, obtaining internal information can be challenging since companies don’t disclose them. However, they can still use other techniques to enhance the quality of the data presented in the financial statements. This process falls under the calculating and interpreting of financial ratios. Financial ratios are crucial metrics that calculate the relative magnitude of one figure to another. In most cases, these ratios consider how one item in the...

Investors can invest their resources in various financial instruments. Usually, these prefer to have share and debt instrument investments. Each of these instruments may come with unique features which differentiate them from the others.  On top of those features, they may also come with various terms, which differ based on context. One such area where these terms may differ includes the values for financial instruments. Usually, these instruments come with a value, which dictates how much the investor will pay for them. This value may differ based on whether the investor acquires the underlying security from the market or the issuer. In most cases, investors deal with the market, and, therefore, the market value may be highly crucial. In some cases, other terms may also dictate the value or financial aspects of the underlying security. Of these, the par value and face value are highly crucial.  However, they may relate to different scenarios or assets. In most cases, both o...