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 Read more…
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 Read more…
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 Read more…
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 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…
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…
Flux Analysis is a type of comparison technique that helps us understand the changes in a company’s financials from period to period. It is shortened from Fluctuations Analysis and is also sometimes called Horizontal Analysis. We use the method to evaluate the fluctuations in accounts over time. We usually express Read more…
The Market Value of Equity of the company, also known as Market Capitalization, is the total monetary value of the firm’s equity. We calculate it as the current stock price multiplied by the number of outstanding shares. Therefore the MVE continually changes, as these two values are quite volatile. Analysts 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…
