Magnimetrics Library
Practical finance, Excel, valuation, and FP&A articles with downloadable working files where relevant.
Introduction Most significant new projects for a business require investments in Working Capital, and this harms a company’s cash flow. Proper cash management is essential if we want the company to continue to operate in the future. A business can be profitable, but if it can’t keep cash on hand, it won’t survive. Therefore it […]
Introduction The Weighted Average Cost of Capital (WACC) shows a firm’s blended cost of capital across all sources, including both debt and equity. We weigh each type of financing source by its proportion of total capital and then added together. Financial analysts use WACC widely in financial modeling as the discount rate when calculating the […]
Microsoft Excel is an essential tool for many businesses, but few fully utilize its automation capabilities to streamline repetitive tasks. You can use macros to automate almost any actions you typically perform manually in Excel. This can often result in substantial time savings from mundane business tasks. It can also significantly improve accuracy by minimizing […]
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 […]
Understanding the Gordon Growth Model for Stock Valuation The Gordon Growth Model (GGM) is a method for the valuation of stocks. Investors use it to determine the relationship between value and return. The model uses the Net Present Value (NPV) of future dividends to calculate assets’ intrinsic value. It’s the most popular variation of the […]
Research in the SME sector shows that around 40-50% of companies seek debt financing at least once in their life cycle. It’s essential to understand the actual cost of Debt to make informed decisions within the business. The Cost of Debt represents the effective interest rate the business pays on its debts. Generally, the ratio […]
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 […]
What is technical analysis? Technical and Fundamental Analysis are the two most common ways of performing research on any trading vehicle (incl. stocks, commodities, currencies, ETFs). Traders use these tools to evaluate investments and spot trends, which indicate good opportunities for trading. Fundamental analysis tries to weigh all the information in a given market (such […]
The term value-added represents the enhanced value a company adds to its products and services. You probably notice that products sell for more than it costs to produce them, and services charge more than it costs to render them. This is what value-added represents. The essential purpose of any business is to create value that […]
Seasonality is a characteristic of time-series where the data has predictable and somewhat regular fluctuations that repeat year over year. It is safe to assume that any pattern of data changes over one-year periods represents seasonality. It is usually driven by weather or commercial seasons. We have to differentiate the term from cyclical data, as […]
