“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
The stock market is a complex system with which even the most experienced investors can struggle. However, there are a few key concepts that every investor should be aware of to make informed decisions about
Lowering churn is a top priority for many businesses regardless of their industry. Churn is the last thing you want among many key performance indicators (KPI). A higher churn rate means more customers drop off
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
Artificial Intelligence (AI) is one of the most rapidly emerging and progressive technologies globally. We can define it as “the ability of a digital computer or computer-controlled robot to perform tasks commonly associated with intelligent
As we discussed in our last article, debt covenants are provisions within financial agreements such as loans or credit lines between lenders and borrowers that restrict certain activities like dividends and asset sales to protect
A covenant is a promise that restricts or impairs the ability of one party to act in some way. When a company raises debt, it is usually subject to conditions, restrictions, and terms known as
The Fintech industry is one of the fastest-growing industries due to the competition. Almost by default, all of the big players in the Fintech industry are well-funded and backed by investors with deep pockets. As
An important financial event for any organization is the month-end close process. Whether the business entity you work with is a corporation, small business, or non-profit, closing the books is universally important. This activity indicates
What is fundamental analysis Previously, we discussed technical analysis to evaluate investment opportunities and spot trends that can help us predict the possible price movements of financial instruments. Fundamental analysis is another tool that investors
“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 ranges, and data tables. Better financial models start with better conceptualizations and more straightforward ways of representing the issues you are trying to analyze and solve. Read ahead for 5 great tips on how to build better financial models in Excel! Tip 1: Start with outlining the flow of your financial model Before you even open Excel, spend some time outlining the flow of your model. What are you trying to accomplish? Who is it for, and how will it be used? Which data sources will be required? It’s essential to set goals before you
The stock market is a complex system with which even the most experienced investors can struggle. However, there are a few key concepts that every investor should be aware of to make informed decisions about their money. In this article, we will discuss some of these critical concepts. We are talking about a collection of markets where stocks (pieces of ownership in businesses) are traded between investors. It usually refers to exchanges where stocks and other securities are bought and sold. The stock market is a vital part of a free-market economy, as it provides a place for investors to buy and sell shares in public companies. The stock market plays several crucial roles in the economy, including price discovery and efficient capital allocation. In the United States, the stock market is regulated by the Securities and Exchange Commission (SEC) and local regulatory bodies. The US stock market has been
Lowering churn is a top priority for many businesses regardless of their industry. Churn is the last thing you want among many key performance indicators (KPI). A higher churn rate means more customers drop off from your services. With that said, how do you reduce customer churn rate? How do you generate new demand for your products and services? Here are 10 things to consider that can help your business. 1. Connect With Your Best Customers Businesses that want to reduce churn will identify a pool of customers most likely to cancel and focus on keeping them. While this is a reasonable effort, it’s best to understand that you can’t keep everyone. It may even be detrimental for you to spend too much on all your customers trying to churn. The best move is not to pursue everyone but instead find your best customers who are close to churning and
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 (overdrafts) to support short-term inventory and working capital needs; Investment loans to support long-term strategic endeavors (installing a new assembly line or purchasing new equipment). Working capital loans would sit in the short-term liabilities on the balance sheet, while investment loans sit on the long-term liabilities. While overdrafts are usually due within a year, and most companies repay them in a single installment, investment loans typically come attached to a strict repayment schedule. Most commonly, these have a fixed monthly installment. Initially, more of the installment covers interest on the outstanding amount, while a smaller portion of the payment
Artificial Intelligence (AI) is one of the most rapidly emerging and progressive technologies globally. We can define it as “the ability of a digital computer or computer-controlled robot to perform tasks commonly associated with intelligent beings.” (Britannica, https://www.britannica.com/technology/artificial-intelligence) Over the next few years, AI will have significant influence not only in accounting and finance but also in most business sectors. However, there are many uncertainties around the subject, so organizations are hesitant about implementing AI technology. That is why it is essential to be aware of the risks to increase acceptance gradually. How Does AI Transform Accounting and Finance? Already, there are many AI solutions available for businesses to employ, and many other, more reliable and efficient, are being developed as we speak. We can categorize them into four main types: assisted, augmented, automated, and autonomous. Autonomous AI relates to solutions that act autonomously and can adapt to different situations.
As we discussed in our last article, debt covenants are provisions within financial agreements such as loans or credit lines between lenders and borrowers that restrict certain activities like dividends and asset sales to protect lenders’ interests and maintain their risk exposure at acceptable levels. If you are not familiar with debt covenants, I suggest you take a look at the article before you continue. Build a Covenants Tracking Report As you might know already, we recently launched our online FP&A platform in beta, and you can request a free account here or at the top of this page. Let me show you how you can build a reusable debt covenants tracker in half an hour. If you prefer to play around with the finished project, it is available as a public template on your Magnimetrics Dashboard! After securing your free spot on our platform, you can go to the
A covenant is a promise that restricts or impairs the ability of one party to act in some way. When a company raises debt, it is usually subject to conditions, restrictions, and terms known as debt (or financial) covenants. The purpose of debt covenants is to protect creditors by ensuring that borrowers act responsibly and make payments on time. By imposing strict conditions on borrowers’ activities, they limit their freedom to operate. The nature of these covenants varies widely but usually includes principal payments, interest rate changes, levels of financial leverage, working capital requirements, material contracts, mergers & acquisitions activity, and limitations on distributions. Understanding Debt Covenants Lenders take on a calculated risk when they provide debt capital to businesses. Each potential borrower has a unique inherent business risk. When lenders offer loans, they use debt covenants to manage the risk they assume. Debt Covenants are guidelines imposed on borrowing
The Fintech industry is one of the fastest-growing industries due to the competition. Almost by default, all of the big players in the Fintech industry are well-funded and backed by investors with deep pockets. As a result, startups in Fintech are battling over every customer and are not afraid to pay top dollars for customer acquisition. For Fintech startups, the cost of acquiring a customer is between $5 and $300. There are even some startups that spend as much as $800 per acquisition. That speaks volumes about why Fintech companies are doing all that is in their power to retain their existing customers. Customer churn is one of the key metrics used by investors to evaluate the health of a Fintech business. It is one of those things that can attract or drive away investors. It is the difference between surviving until the next series of funding or going bankrupt.
An important financial event for any organization is the month-end close process. Whether the business entity you work with is a corporation, small business, or non-profit, closing the books is universally important. This activity indicates an organization’s revenue, debt, accounts payable, and profits. For newly minted accountants, the first-ever accounting month-end close process is a rite of passage. Over time and with experience, some accountants can turn this seemingly mundane activity into a work of art by seamlessly weaving in technology, processes, and communication. Here’s a look at some industry best practices that empower accountants to fine-tune their skills and understand how technology can accelerate their career success. 1. Have the Right Attitude toward the Month-end Close Month-end accounts closure may not feel like the most exciting job for a new accountant, but it is extremely critical for accountants to take it seriously. Executives and investors leverage the data captured in
What is fundamental analysis Previously, we discussed technical analysis to evaluate investment opportunities and spot trends that can help us predict the possible price movements of financial instruments. Fundamental analysis is another tool that investors use to arrive at a number (fair market value) that we can compare to the security’s current price, thus determining whether it is undervalued. This type of analysis focuses on both the macro and microeconomic factors that can affect the price of a given financial instrument. In contrast with technical analysis, which only considers the historical price movements, the fundamental analysis uses company financials. It considers related economic factors to arrive at an intrinsic value and decide whether it is profitable to invest in that company. Traders prefer fundamental analysis when evaluating stocks, but it is also helpful with other financial instruments, like bonds and derivatives. The “fundamental” idea is to use publicly available data
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