Magnimetrics Library
Practical finance, Excel, valuation, and FP&A articles with downloadable working files where relevant.
Most companies in the manufacturing and retail industries have Inventory. Slow-moving and obsolete Inventory can have a severe adverse effect on the profitability of the business. When we can’t realize our goods on hand, they lose value and may become useless for the company. To account for this decrease in value, we write down or […]
Since businesses have gone digital, not just with marketing but also through systems analysis, Business Intelligence (BI) automation has become the next buzzworthy word. But what exactly do we know about it? What are the risks and benefits of shifting towards this new movement in business tech? Let’s discuss these important points today and read […]
What is Terminal Value? The Terminal Value (TV), or as it is also known, continuing value or horizon value, is the value of an investment or a business at the end of a specific period. A firm or project potentially has an infinite life, meaning its value is the Net Present Value (NPV) of cash […]
In finance, one of the popular methods to adjust return rates of investments for risk is the Sharpe Ratio. William F. Sharpe developed the ratio in 1966 and revised it in 1994 to arrive at the formula we use today. Originally he called it the ‘reward-to-variability’ ratio. Later on, finance professionals started referring to it […]
“If you cannot explain it simply, you don’t understand it well enough.” Albert Einstein It’s a simple sentence, but it carries a lot of truth. A lack of simplicity is often why models are so complicated that they are almost useless. And I’m not just talking about Excel workbooks full of hard-to-track VLOOKUPs, convoluted named […]
We are approaching the second half of the year, and before we know it, it will be the time of year to start working on our projections for next year and the company’s annual budget. There are many complex and detailed models that we can utilize to forecast the sales performance of the business for […]
Accounting standards (IRFS and US GAAP) require that we apply a conservatism principle when we assess the value of assets and transactions. The Net Realizable Value (NRV) is the amount we can realize from an asset, less the disposal costs. The most often use of the method is when we evaluate inventory and accounts receivable […]
A Debt Amortization Schedule outlines how a company will be settling its debt and interest over time. Businesses often rely on debt capital (loans) to support their growth strategy and expansions. In general, there are two types of loans you would generally see on a company’s balance sheet: Working capital loans would sit in the […]
The Receivables Aging (or Ageing, if you prefer British English) report is a tool that lists all unpaid customer balances by pre-defined date ranges (buckets). It shows the relationship between open invoices and their due dates. It is the primary tool to determine overdue balances for collection. It’s useful for the company’s management, as it […]
Inventory-heavy businesses constantly look at ways to optimize their inventory balances. If a company purchases too much stock, it ties up too much cash into inventory and ends up experiencing high storage costs. If the company buys too little, on the other hand, it won’t be able to meet customers’ or production needs. The Economic […]
