What Is a Multinomial Distribution? A Multinomial distribution is the data set from a multinomial experiment. It is an extension of binomial distribution in that it has more than two possible outcomes. A multinomial distribution is a type of probability distribution. It is the result when calculating the outcomes of […]
Financial Analysis
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What Is the Sum of Squares? The Sum of squares is a statistical technique to measure how dispersed the numbers in a dataset are and their deviation from a mean data point The Sum of squares is used in statistics for regression analysis to determine the dispersion of data points. […]
What Is the Fixed-Charge Coverage Ratio? The Fixed Charge Coverage Ratio measures a firm’s ability to pay its fixed charges or expenses with the income it generates before interest and income taxes. Fixed charges are business expenses that occur on a regular basis. They are independent of the volume of […]
What Is Actuarial Science? Actuarial science is a discipline that uses mathematics, statistics, and economics to assesses financial risks in the insurance and finance fields. Actuarial science majors use this training in mathematics and economics to solve business problems that identify and manage financial risk. Actuaries apply the mathematics of […]
What Is the Sortino Ratio? The Sortino ratio evaluates risk vs return on an investment or portfolio. It is a variation of the Sharpe ratio but it only factors in downside deviation. For an investor, the ratio helps determine an investment’s return relative to risk. Investors can also use it […]
What Is the Cash Ratio? The cash ratio is a liquidity measure that indicates a company’s ability to pay off short-term debt with its cash and cash equivalents. The ratio provides a quick glimpse at a company’s liquidity. Specifically, the ratio of a company’s total cash and equivalents to its current […]