Understanding the Cost of Debt Ratio

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 […]

Multiple Linear Regression Analysis in Excel

In a previous article, we explored Linear Regression Analysis and its application in financial analysis and modeling. You can read our Regression Analysis in Financial Modeling article to gain more insight into the statistical concepts employed in the method and where it finds application within finance. This article will take a practical look at modeling […]

Regression Analysis in Financial Modeling

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 […]

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 […]

How to use the Asset Turnover Ratio

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 […]

Obsolete Inventory and How to Deal With It

Most companies in the manufacturing and retail industries have Inventory. Slow-moving and obsolete Inventory can have a severe adverse effect on the profitability of the business. When we can’t realize our goods on hand, they lose value and may become useless for the company. To account for this decrease in value, we write down or […]