The Gordon Growth Model (GGM) assumes that a company has been around forever and that there is a constant increase in dividends when the company’s stock is valued.
GGM works by taking an infinite series of dividends per share and discounting them back to the present using the required rate of return.
This is a variant of the Dividend Discount Model (DDM).
GGM is ideal for companies with sustainable growth rates, given its assumption of constant dividend growth.
Performance Based Management (ABM) is a means of analyzing a company’s profitability by looking at every aspect of its business to determine its strengths and weaknesses.
A ballpark figure is a rough estimate of what something might mean in numerical terms when a more precise number is estimated, such as the cost of a product.
The binomial distribution is a probability distribution that generalizes the probability that a value will take on one of two independent values given a set of parameters or assumptions.
Share capital is the number of ordinary and preferred shares that the company has the right to issue and which are accounted for on the balance sheet as part of share capital.
The Central Limit Theorem (CLT) states that the distribution of sample means approaches a normal distribution as the sample size increases, regardless of the distribution of the population.