Magnimetrics Library
FP&A, valuation, Excel, and financial modeling articles with practical downloadable resources.
Introduction Opportunity cost represents the benefits the business misses out on when picking between alternatives. When we have two desirable options, the benefit from the one not chosen is our opportunity cost. These costs are usually the result of bottlenecks in business processes. Therefore, finance professionals use Opportunity Cost analysis to improve the decision-making process […]
Costing is an essential aspect of operations for companies that want to understand how their production absorbs costs. Only by gaining a solid understanding of the company’s cost structure can we start to control and optimize it. We can often divide the production process into specific jobs and apply the job costing method to them. […]
The primary purpose of any business is to produce goods or provide services in a way that they have a higher value for the customers than the original cost for the firm. Companies engage in numerous activities while converting inputs to outputs. Porter’s Value Chain helps us create a clear overview of the internal organization, […]
Whenever we are constructing a financial model, we rely heavily on assumptions. Some, if not all, of those assumptions, have the associated uncertainty and inherent risk. Not being able to predict the future makes it harder to solve and model the probability of different outcomes from our financial models. In such situations, we can apply […]
What is a Leveraged Buyout (LBO) Transaction? A Leveraged Buyout (LBO) transaction is the acquisition of an entity using significant amounts of loaned capital to meet the consideration. LBO transactions can go up to 9:1 ratio of Debt to Equity. In a Leveraged Buyout transaction, the target company’s assets become collateral for the loan. LBOs […]
Regression analysis aims to model the expected values for a dependent variable (y) based on independent variables (x). The polynomial regression is a statistical technique to fit a non-linear equation to a data set by employing polynomial functions of the independent variable. We can use the model whenever we notice a non-linear relationship between the […]
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 […]
Regression Analysis represents a set of statistical methods and techniques, which we use to evaluate the relationship between variables. These are one dependent variable (our target) and one or more independent variables (predictors). We have three primary variants of regression – simple linear, multiple linear, and non-linear. However, most of the time, we use linear […]
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 […]
The Asset Turnover Ratio measures how efficiently management uses the company’s assets to generate sales revenue. The ratio compares the amount of net sales to its total assets. It’s a standard efficiency ratio, as it gives investors an idea of how well management runs the company. What is the Asset Turnover Ratio The ratio, also […]
