Forecasts with the Polynomial Regression Model in Excel

Regression analysis aims to model the expected values for a dependent variable (y) based on independent variables (x). The polynomial regression is a statistical technique to fit a non-linear equation to a data set by employing polynomial functions of the independent variable. We can use the model whenever we notice a non-linear relationship between 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 […]

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 […]

How to Run a Two-Way Analysis of Variance (ANOVA) in Excel

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 than two groups. It is […]

Perform a One-Way Analysis of Variance (ANOVA) in Excel

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 and formulas. We will briefly […]

Introduction to Seasonality in Financial Analysis and Modeling

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 term from cyclical data, as […]

How to Calculate the Beta of a Company

Beta is a risk-reward measure from fundamental analysis to determine the volatility of an asset compared to the overall market. We consider the market to have a beta of one. Then all assets are ranked based on their deviation from the market. If an asset’s returns fluctuate more than the market, then this asset has […]

Black-Scholes Model: First Steps

Today we take a look at the most popular options pricing model. The Black Scholes Model, also known as the Black-Scholes-Merton method, is a mathematical model for pricing option contracts. It works by estimating the variation in financial instruments. The technique relies on the assumption that prices follow a lognormal distribution. Based on this, it […]

Calculate Value in Use under IAS 36

The core underlying principle of IAS 36 Impairment of Assets is that an asset’s carrying value in the financial statements of the company should not exceed the highest amount the business can recover through its use or sale. The standard applies to all assets for which there are no impairment considerations elsewhere. As an example, […]

Rolling Forecasts in Financial Planning

Let’s start by looking at why businesses need rolling forecasts. When running a business, we need to have a full view of what’s happening so that we can make the proper decisions. The best way to achieve this is to implement a budgeting and planning process. We create an expected standard performance for the business […]