Day: February 19, 2021

INTRODUCTION The Capital Asset Pricing Model (CAPM) is an extension of Portfolio Theory, which is concerned with the risk and return of portfolios and the process by which risk can be reduced by efficient diversification.  The CAPM assumes that all Read More …

INTRODUCTION A portfolio is a collection of different investments which comprise an investor‟s total investments.  For example, a property investor‟s portfolio may consist of many investment properties in different locations and which are used for varied purposes.  Other examples of Read More …

INTRODUCTION  It is important that a company is aware of its cost of capital.  In certain cases it is not initially apparent what this cost is (e.g. new share issue, retained earnings etc.) and a number of models have been Read More …

INTRODUCTION It may be necessary to carry out a valuation for: Quoted Companies – where a bid is made and the offer price is an estimated “fair value” in excess of the current market price of the shares. Unquoted Companies Read More …

INTRODUCTION A lease is a contract between a lessor (bank/finance house) and a lessee (person/company to whom the asset is leased) for the hire of a specific asset.  The lessor retains ownership but gives the lessee the right to use Read More …

INTRODUCTION Dividends are paid from retained earnings Retained Earnings – -One of the most important sources of “new” equity funds for companies.  The more funds retained, the less available for the payment of dividends and vice versa. Prime Objective – Read More …

INTRODUCTION Many new business ventures are considered too risky for traditional bank lending (term loans, overdrafts etc.) and it is this gap that Venture Capital usually fills. Venture Capital could be described as a means of financing the start-up, expansion Read More …

SHARE CAPITAL Ordinary Shares The main features are: Issued to the owners of the company (equity). Nominal or “face” value (e.g. 1000rwf.). Market value moves with market‟s view of the company‟s performance/prospects. Shareholders are not liable for the company‟s debts Read More …

INTRODUCTION Capital Markets are markets where long-term instruments are traded e.g. equities, preference shares, debentures etc. A good example of a Capital Market is the Stock Exchange. The Rwanda Stock Exchange was incorporated as a limited company 7 October 2005 Read More …

OVERVIEW OF WORKING CAPITAL MANAGEMENT Definition of Working Capital Working Capital (Net Current Assets) = Excess of Current Assets over Current Liabilities. Current Assets: Stock (Finished Goods, WIP and Raw Materials), Debtors, Marketable Securities and Cash/Bank. Current Liabilities: Creditors Due Read More …