Time Value of Money
A dollar today is worth more than a dollar tomorrow.
What is Time Value of Money?
Money available now can be invested, so it is worth more than the same nominal amount later. The foundation under discounting, present value, annuity math, and essentially every retirement projection.
Time Value of Money: a worked example
$10,000 today at 7% becomes $19,672 in 10 years.
More terms in Valuation & Analysis
Market Capitalization
Share price times shares outstanding - the equity value of a company.
Earnings Per Share (EPS)
Net income attributable to each share of common stock.
Price-to-Earnings (P/E) Ratio
Price per share divided by earnings per share.
Dividend Yield
Annual dividends per share divided by share price.
Payout Ratio
The share of earnings paid out as dividends.
Book Value
Assets minus liabilities - the accounting value of equity.
Free Cash Flow
Operating cash flow minus capital expenditures.
EBITDA
Earnings before interest, taxes, depreciation, and amortization.