How to Perform a Cash Ratio Analysis in Excel
The Cash Ratio represents a measurement of the liquidity of a company. It evaluates the ability of the business to cover short-term obligations with cash and cash equivalents alone. It is particularly useful to creditors when deciding how much money they are willing to loan to a company. Suppliers also consider the ratio when assessing […]
Understanding our Burn Rate and Runway
What is Burn Rate? We call Burn Rate the rate at which it spends its raised funds to cover running costs. It is used with new companies and start-ups and is a measure of negative cash flow. Investors and managers usually state Burn Rate per month, but in crisis times, we can measure it on […]
Terminal Value of the Business
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 […]
Free Cash Flow (FCF)
This week we take a look at Free Cash Flow and how we can use it within a financial analysis setting. What is Free Cash Flow? The Free Cash Flow (FCF) represents the cash generated, after cash outflows to support the operating activities of the business and to maintain its capital assets. It’s a measure […]
The Discounted Cash Flow (DCF) Valuation Method
Today we are looking at how the Discounted Cash Flow (DCF) method is used to evaluate investment opportunities or project alternatives in big companies, like launching a new product, a new assembly line, etc. We can use the DCF method whenever we consider paying now to get more money (or benefits) later. Investors and Investment […]