Marsad Insights

Return on Investment (ROI) is a financial metric that measures how profitable an investment is by comparing the net profit it generates with the amount invested, expressed as a percentage. Formula: ROI = (Net Profit ÷ Investment Cost) × 100. For example, investing QAR 100,000 and earning a net profit of QAR 20,000 gives an ROI of 20%. Investors rely on ROI because it puts opportunities of very different sizes on a common footing and shows quickly whether the return justifies the capital and risk involved. Its main limitation is that it ignores time: 20% over one year is far better than 20% over five. For that reason it is best read alongside annualised return, payback period and IRR.

A capitalization table (cap table) is a document that sets out a company's ownership structure: who the shareholders are, how many shares each holds, their percentage stake, and the funding rounds and employee stock options that affect ownership. Ownership % = (shareholder's shares ÷ total shares outstanding) × 100. For example, two founders holding 60% and 40% become 48% and 32% after an investor takes 20% through newly issued shares. Investors care because the cap table shows transparently who owns and controls the business, reveals how their stake could be diluted in future rounds, and is one of the first documents requested in any due diligence.

An escrow account is a secure, neutral bank account in which a trusted third party, such as a bank or licensed escrow agent, temporarily holds funds for a transaction and releases them to the beneficiary only once agreed contractual conditions are met. There is no formula; it is a contractual mechanism: deposit, verify conditions, then release or return funds as the agreement specifies. For example, an investor committing $1 million to a project can place the money in escrow so it reaches the company only after the required documents and conditions are completed. Investors value escrow because it protects their capital, reduces fraud and counterparty risk, and builds trust by tying payment to performance.

A bond is a financial instrument issued by a government or company to borrow money from investors. In return, the issuer promises to pay periodic interest, known as the coupon, and to repay the principal (face value) on a set maturity date. A bondholder is a lender to the issuer, not an owner. Formula: annual coupon = face value × coupon rate. For example, a $10,000 five-year bond paying 8% returns $800 a year, with the full $10,000 repaid at maturity. Investors buy bonds for predictable income, generally lower risk than many equities and portfolio diversification. Default, interest-rate and inflation risks still apply, so the issuer's credit quality matters.

A Private Placement Note (PPN), also widely known as a Private Placement Memorandum (PPM), is an investment document used to present an opportunity to a limited number of qualified investors or institutions rather than to the general public. It brings together the information an investor needs to make an informed decision: an overview of the company or project, the amount being raised, how the proceeds will be used, the revenue and profit model, the management team, financial projections, potential risks and the terms of the investment. There is no formula; it is a disclosure document, not a metric. Example: a company raising $10 million from a select group of investors prepares a PPN outlining the business, expected returns, risks and deal structure. Investors care because it anchors evaluation and negotiation, although it never replaces independent due diligence.

EBITDA stands for Earnings Before Interest, Taxes, Depreciation, and Amortization. It measures how much profit a company generates from its core operations, stripping out the effects of financing decisions, tax regimes and non-cash accounting charges. Formula: EBITDA = Net Profit + Interest Expense + Taxes + Depreciation & Amortization. Example: a company with net profit of $1,000,000, interest of $200,000, taxes of $100,000 and D&A of $300,000 has EBITDA of $1,600,000. Investors rely on it to compare companies more fairly and as the base for valuation multiples such as EV/EBITDA in sales and acquisitions. It is not cash profit, however: it ignores capital expenditure, working-capital needs and debt repayments, so it should always be read alongside cash flow and leverage.

GMV stands for Gross Merchandise Value: the total value of goods or transactions sold through a platform or business over a specific period. It is widely used by e-commerce platforms, delivery apps, travel marketplaces and other digital businesses to measure transaction volume. Formula: GMV = Number of Sales × Average Product Value. Example: a platform that sells 1,000 products at an average price of $100 has GMV of $100,000; if it earns a 10% commission, its actual revenue is only $10,000. Investors watch GMV because it shows scale, growth and market traction, and it is common in startup and technology valuations. But GMV is not revenue and not profit, so it should be read alongside take rate, net revenue and profitability.

DCF stands for Discounted Cash Flow, one of the most widely used methods for valuing businesses, projects and investments. It rests on the idea that money expected in the future is worth less than money available today, because of inflation, risk and the returns available elsewhere. Future cash flows are therefore discounted back to present value and added together. Formula: Present Value = Cash Flow ÷ (1 + Discount Rate)^Year. Example: a project expected to generate $100,000, $120,000 and $150,000 over three years is worth roughly $302,780 today at an illustrative 10% discount rate. Investors use DCF to estimate intrinsic value and support acquisition, financing and investment decisions, although its accuracy depends heavily on the quality of the forecasts and the discount rate chosen.