Talking Cents

Our small business accountants in Sydney will explain yield of maturity

Most businesses have some sort of bond happening with their business, yet most owners don’t really know what they mean or how they are calculated. Our small business accountants in Sydney will explain yield of maturity (YTM) for you.

What does YTM mean? It is the total return anticipated on a bond if it held for the entirety of its lifetime. YTM is considered to be a long-term debt investment, but is still expressed as an annual rate. In other words, this is considered to be an internal rate of return of an investment in a bond, if the investor holds the bond until maturity and if all payments are made on time.

How can you calculate YTM? Well the formula is:

Bond Price = Cashflow 1 + Cashflow 2 + … + Last Cashflow
                          (1+yield)1     (1+yield)2            (1+yield)n

It is quite a simple equation to follow, but if you have any problems our business accountants in Sydney are only one call away.

Feel free to contact our small business accountants in Sydney with and enquiries you have.