Magnimetrics Library
Practical finance, Excel, valuation, and FP&A articles with downloadable working files where relevant.
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 […]
Capital Expenditures, or CAPEX for short, are cash or credit payments to acquire goods or services that we capitalize in balance sheet assets. From the company’s perspective, we consider those to be an investment. Here we include all expenses that are not shown on the Income Statement and do not affect profit and loss for […]
Introduction to Internal Rate of Return Companies undertake various projects with the end goal to either increase earnings or cut down costs. These projects often require that the entities make significant investments. In capital budgeting, the management of the business wants to have an estimation of the returns on such investments. The Internal Rate of […]
In my current job in Mergers & Acquisitions, I have to prepare many complex folder structures for targets’ data rooms. It’s a tedious but straightforward process that can take up to an hour, as each Request For Information letter is almost the same but contains slight differences. For example, we may need detailed information of […]
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 […]
Today we are looking at a more complex financial analysis model – the Altman Z-Score Analysis. But I promise, there’s a reward at the end of the article. The Z-score formula for predicting bankruptcy was published in 1968 by Edward Altman, Assistant Professor in the field of Finance in the New York University. In the […]
Introduction The Perpetuity concept refers to the present value (PV) of equal periodic cash flows that investors will receive over an indefinite future period. We need to calculate the present value of perpetual cash flows for a variety of reasons, some being: In business and finance, perpetuity is a regular payout of the same amount […]
The Perpetual Inventory System is a method of accounting for the number and value of goods on hand at any time. It helps with the vital task of keeping track of inventory levels so that we can timely replace goods when they run out and to ensure that we record the correct amount of revenue […]
Explore common Excel formula errors in finance and learn effective solutions to avoid costly mistakes in your financial models.
Introduction to Sales Trend Analysis Sales Trend Analysis looks at historical revenue data to identify patterns, used extensively in budgeting and forecasting. It is a useful method to detect short-term changes in revenue growth and performance. Trends A Trend is an upwards or downwards shift in the development of a metric over time. It’s useful […]
