A financial ratio measures the relationship between two or more numerical values included in a corporate financial statement. Ratios can be expressed as a decimal value, for example, 0.20, or percent value, for example, 20%. Ratios that are more than 1, for example, P/E, are also called multiples.
There are hundreds of financial ratios and these ratios are divided into 5 major categories:
(i) Profitability ratios
(ii) Cash flow ratios
(iii) Efficiency Ratios
(iv) Value ratios
(v) Leverage Ratios
VENTURE CAPITAL (VC)
A Venture capital is a private financial company that provides funding opportunities to high-growth start-ups. These start-ups may be at an early stage or at a later stage of development. Usually, venture capitalists are focusing on high-growth industries like the internet industry.
The funding choice of venture capital is ideal for new companies that are dynamic but too small in order to raise funds in the capital markets
Venture Capital Roles
Important roles in a Venture Capital except for the management include:
- Venture Capital Management (they get paid by investors and receive an annual fee of 1-2% of the total capital plus a performance incentive of 10-20% of the venture capital profits)
- Venture Partners — (they are employees tracking potential investment opportunities)
- Principal — (they are experienced employees in a particular field like investment banking or business consulting)
- Associate — (below principal, it is an apprentice position)
- Entrepreneur-in-Residence (the EIR are experts in performing due diligence on particular types of industries)
HEDGE FUNDS AT CROWDHOLDER
What are Hedge Funds?
Hedge funds are actively managed investment pools that are managed by a single director and invest in a wide range of markets using a wide range of instruments. Hedge funds are often open and allow any investor to participate if he can meet the minimum entrance amount. Some other funds are closed to investors.
- Hedge funds can benefit from both directions of the market (bull/bear) using derivatives products
- Hedge funds can profit from the general market volatility using complex financial instruments
- In 2012 the size of the global hedge fund industry was estimated at 2.13 trillion US dollars, in 2021, it is estimated at 4.0 trillion US dollars