Finelo Blog
Learn investing and trading, one article at a time. Practical guides, beginner-friendly explainers, and learning tips from the Finelo team.
What Is the Accounts Receivable Turnover Ratio?
The accounts receivable turnover ratio measures how many times a company collects its average outstanding customer credit balances during a period, usually a year. It is calculated as net credit sales divided by average…
What Is Return on Invested Capital (ROIC) and Why It Matters
Return on invested capital (ROIC) measures how much after-tax operating profit a company generates for every dollar of capital invested in the business: ROIC = NOPAT ÷ invested capital. A company earning more than its…
What Is Maximum Drawdown and Why It Matters for Investors
Maximum drawdown is the largest peak-to-trough loss a portfolio or investment has suffered over a period, expressed as a percentage of the peak value. If an account grows to $10,000, falls to $6,000, and later recovers,…
What Is an Economic Moat? Understanding Its Meaning and Importance
An economic moat is a long-lasting structural edge that shields a business's earnings from competitors, much as a water-filled trench once shielded a castle. The term, popularized by Warren Buffett, describes anything…
What Is a Special Dividend? Meaning, Taxes, and Examples
A special dividend is a one-time cash payment a company makes to shareholders outside its regular dividend schedule. It usually follows a very profitable period, an asset sale, or a decision to return excess cash. Unlike…
What is a Dividend Reinvestment Plan (DRIP)?
A dividend reinvestment plan (DRIP) automatically uses each cash dividend a company or fund pays you to buy more shares - including fractional shares - instead of depositing the cash to your account. Most major brokers…
What Happens When a Stock is Delisted?
When a stock is delisted, it is removed from an exchange such as the NYSE or Nasdaq. Delisting alone does not cancel your shares, but continued trading is not guaranteed: the security may move to an over-the-counter…
What Are Stock Market Circuit Breakers and How Do They Work?
Stock market circuit breakers are automatic, market-wide trading halts. They trigger when the S&P 500 falls 7% (Level 1), 13% (Level 2), or 20% (Level 3) from the prior day's close, per the Investor.gov glossary. Level 1…
VWAP Indicator: Definition, Calculation, and How Traders Use It
The vwap indicator, short for volume-weighted average price, shows the average price a security has traded at during the day, weighted by volume. In plain terms, it answers one question: where has most of today's money…
Volume Profile Trading: How to Read and Use the Levels
Volume profile trading is a charting method that shows how much volume traded at each price level, drawn as horizontal bars along the side of the chart. Instead of asking when trading happened, it asks where. The result…
Understanding the Sharpe Ratio: Formula, Interpretation, and Limits
The Sharpe ratio measures how much return an investment earns per unit of risk. It divides the return earned above a risk-free benchmark by the volatility of those returns, so a higher number means better risk-adjusted…
Understanding the Operating Cash Flow Ratio
The operating cash flow ratio compares cash generated by operations during a period with current liabilities reported on the balance sheet. It is a liquidity indicator, not a literal claim that the same cash is available…
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