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 Read more…
When a company hires employees, they provide it with services. In turn, the company, as their employer, reimburses their time spent with a remuneration package. This usually consists mostly of a salary but can include various other benefits, some of which may be mandated by law or local legislation. One Read more…
Accounting standards (IRFS and US GAAP) require that we apply a conservatism principle when we assess the value of assets and transactions. The Net Realizable Value (NRV) is the amount we can realize from an asset, less the disposal costs. The most often use of the method is when we Read more…
The Receivables Aging (or Ageing, if you prefer British English) report is a tool that lists all unpaid customer balances by pre-defined date ranges (buckets). It shows the relationship between open invoices and their due dates. It is the primary tool to determine overdue balances for collection. It’s useful for Read more…
Gathering data in itself is meaningless unless we can analyze it and draw powerful insights. What makes data interesting is the ability to evaluate and interpret it. Hypothesis testing refers to a term in statistics where we, as the analysts, evaluate an assumption related to a data set parameter. Based Read more…
Recently, we looked at how to Perform a One-Way Analysis of Variance in Excel. In today’s article, we will take that a step further and a look at a Two-Factor ANOVA. The Two-Way Analysis of Variance (ANOVA) is a statistical test to evaluate the difference between the means of more Read more…
The Analysis of Variance (ANOVA) has many varieties, but in essence, it has the purpose of evaluating whether factors are associated with any outcome values. And factors are categorical variables we use to group the outcome variables. In this article, we will not be focusing on the underlying statistical principles Read more…
In our last article, we discussed Seasonality in Financial Modeling and Analysis. We went over an example Excel model of calculating a forecast with seasonality indexes. Today we will use regression analysis in Excel to forecast a data set with both seasonality and trend. Let’s look at the quarterly sales Read more…
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 Read more…
We are approaching the second half of the year, and before we know it, it will be the time of year to start working on our projections for next year and the company’s annual budget. There are many complex and detailed models that we can utilize to forecast the sales Read more…
