Financial Thought of the Day November 12, 2014: Long-Term Debt

Long-term debt is obligations incurred by a business or entity that comes due at a point exceeding one year. This type of debt can incur interest expense.

Financial Thought of the Day November 11, 2014: Operating Profit

Operating profit is the amount of profit a company makes from its operations. It doesn’t account for items such as investment income, interest expense, and income tax expense.

Financial Thought of the Day November 10, 2014: Making Money May Not Always be Easy

It’s always good to save when times are good and money is easy to make. There may come a time when making money won’t be that easy and you will need a savings cushion to fall back on.

Financial Thought of the Day November 7, 2014: Day Trading/Dog Track—What’s the Difference?

When you trade your stocks on a day in and day out basis you subject yourself to the daily whims of the stock market which could go in any direction based on an infinite number of factors. By contrast, buying a share of an excellent business and holding it for the long-term will make you wealthy. If you want to day trade you would be just as well off as to go the dog track.

Financial Thought of the Day November 6, 2014: Times Interest Earned

Times interest earned is a very important and often overlooked measure. It is defined by the following formula--operating income/interest expense. It describes a company’s ability to cover interest expense incurred by long-term debt. I have said in many of my articles that the rule of safety lies at five times or more. Companies who can’t meet interest obligations may go into bankruptcy.

Financial Thought of The Day November 5, 2014: Again-Always Save Something

Remember..always save something even if it is a few bucks a pay period. You never know when you may need it.

Financial Thought of the Day November 3, 2014: Profit Margin

Profit margin is defined by the following formula: (Net Income/Revenue) x 100. It is essentially the percentage of net income relative to revenue.