{"id":2973,"date":"2020-05-29T21:13:28","date_gmt":"2020-05-29T21:13:28","guid":{"rendered":"https:\/\/thefinanceghost.com\/?p=2973"},"modified":"2020-05-29T21:13:28","modified_gmt":"2020-05-29T21:13:28","slug":"ghostjargonbusters-edition-1","status":"publish","type":"post","link":"https:\/\/thefinanceghost.com\/index.php\/2020\/05\/29\/ghostjargonbusters-edition-1\/","title":{"rendered":"Ghost (????????????????????????) busters – edition 1"},"content":{"rendered":"

F<\/span>inancial jargon can be so frustrating. It\u2019s one thing talking about the basics of investment analysis etc. but as things get more complicated, you just have to know some of the jargon.<\/p>\n

Here\u2019s some jargon to get you started:<\/p>\n

Big balance sheet<\/strong><\/h4>\n

A balance sheet is simply a statement of all assets and liabilities of a company. You have a personal balance sheet, too. The difference between your personal assets and liabilities would be called your \u201cnet worth\u201d and in a company this is called \u201cequity\u201d \u2013 basically the value that belongs to the shareholders.<\/p>\n

When a company is said to have \u201cbig balance sheet\u201d or \u201chas the balance sheet for this\u201d it just means that the company is large and holds significant assets against which it can borrow debt.<\/p>\n

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Highly leveraged<\/strong><\/h4>\n

Speaking of debt, the term \u201chighly leveraged\u201d is almost always used to describe a company that has a lot of debt on the balance sheet. Why the term \u201cleverage\u201d? Using debt \u201cleverages\u201d up the returns to shareholders.<\/p>\n

For example, if all your assets generate a return of 12% and bank debt costs 6%, then as a shareholder you will use the bank\u2019s money to fund as much of the business as possible because you make a significant profit after paying the debt.<\/p>\n

This allows you to generate high profits off a smaller investment of your own money. The result? High return on equity.<\/p>\n

Sweating those assets<\/strong><\/h4>\n

No, this doesn\u2019t refer to your pre-lockdown trips to the gym.<\/p>\n

However, this is something almost all companies are doing as a result of lockdown. Sweating your assets means getting the most out of the assets you already have, by cutting costs and running them as efficiently as possible.<\/p>\n

This sounds like it may always be positive, but the flip side of this is a company that isn\u2019t investing enough in infrastructure or expansion. Eskom, anyone?<\/p>\n

That investor has dry powder<\/strong><\/h4>\n

This is one of those classic terms used by bankers to sound clever. It simply means that the investor has access to cash or easily sellable (i.e. liquid) investments, which allows the investor to quickly move on opportunities.<\/p>\n

The alternative would be an investor who still needs to raise the cash required to do the deal.<\/p>\n

Heard any other terms that you want me to explain? Drop me a mail at help.me@thefinanceghost.com<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Financial jargon can be so frustrating. It\u2019s one thing talking about the basics of investment analysis etc. but as things get more complicated, you just have to know some of the jargon. Here\u2019s some jargon to get you started: Big balance sheet A balance sheet is simply a statement of all assets and liabilities of a company. You have a …<\/p>\n","protected":false},"author":2,"featured_media":2974,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_mi_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[64,26],"tags":[148,146,149,145,147],"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/thefinanceghost.com\/index.php\/wp-json\/wp\/v2\/posts\/2973"}],"collection":[{"href":"https:\/\/thefinanceghost.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/thefinanceghost.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/thefinanceghost.com\/index.php\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/thefinanceghost.com\/index.php\/wp-json\/wp\/v2\/comments?post=2973"}],"version-history":[{"count":0,"href":"https:\/\/thefinanceghost.com\/index.php\/wp-json\/wp\/v2\/posts\/2973\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/thefinanceghost.com\/index.php\/wp-json\/"}],"wp:attachment":[{"href":"https:\/\/thefinanceghost.com\/index.php\/wp-json\/wp\/v2\/media?parent=2973"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/thefinanceghost.com\/index.php\/wp-json\/wp\/v2\/categories?post=2973"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/thefinanceghost.com\/index.php\/wp-json\/wp\/v2\/tags?post=2973"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}