The Purpose of Budget vs. Actuals Analysis
Introduction Running a business comes with many responsibilities. One of the more challenging aspects is being able to forecast future performance and being able to plan and prepare to achieve the business goals correctly. More often than not, budgeting and forecasting concepts are associated with larger enterprises where multiple departments need to work together, and […]
Support Startup Growth with Digital Loans
In today’s dynamic and uncertain business environment, startups face numerous challenges. Effective financial planning and analysis (FP&A) processes are essential for startups. FP&A helps startups create a comprehensive financial plan, analyze financial data, identify potential risks and opportunities, and make informed decisions that align with their goals. Financial modeling is another crucial tool for startups. […]
Days Working Capital: What It Is and How To Track It
Businesses use financial metrics to measure their performance over time. One such metric is Days Working Capital (DWC) which shows us the number of days the company takes to convert working capital into sales revenue. Many investors use DWC as a liquidity indicator to track working capital management efficiency. In this article, we explore some […]
What is Standard Costing and How Does It Work
Standard Cost Accounting (or Standard Costing) is a form of cost accounting that uses predetermined costs for materials, labor, and overhead to estimate the costs of goods or services. Standard costing is typically used in manufacturing to determine the cost of products based on standard rates for materials, labor, and overhead. Companies use standard costing […]
Artificial Intelligence in Finance & Accounting
Artificial Intelligence (AI) is one of the most rapidly emerging and progressive technologies globally. We can define it as “the ability of a digital computer or computer-controlled robot to perform tasks commonly associated with intelligent beings.” (Britannica, https://www.britannica.com/technology/artificial-intelligence) Over the next few years, AI will have significant influence not only in accounting and finance but […]
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 […]
Understanding the Gordon Growth Model for Stock Valuation
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 […]
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 […]
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 […]
Vacation Days and Unused Paid Leave Accrual
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 of those benefits is the […]