## Creating a Cash Flow Forecast Model

This week we will take a practical look at creating a Cash Flow Forecast model. What is a Cash Flow Forecast and Why we need one The Cash Flow forecast is a crucial planning tool for financial management. It is the process of preparing an estimate of future financial performance, Read more…

## Free Cash Flow (FCF)

This week we take a look at Free Cash Flow and how we can use it within a financial analysis setting. What is Free Cash Flow? The Free Cash Flow (FCF) represents the cash generated, after cash outflows to support the operating activities of the business and to maintain its Read more…

## The Absorption Costing Method

Today we take a look at the Absorption Costing Method and how it is used to allocate cost to produced goods. Do not forget to download the Excel working file at the end of the article. What is Absorption Costing? Absorption Costing is a management accounting method for accumulating all Read more…

## Cost-Volume-Profit Analysis and Break-even point

Today we will take a look at Cost-Volume-Profit (CVP) analysis and the Break-even point (BEP) in sales. Cost-Volume-Profit Analysis The Cost-Volume-Profit  (CVP) analysis is a method of cost accounting. It looks at the impact of changes in production costs and sales on operating profits. Performing the CVP, we calculate the Read more…

## Discounted Cash Flow Valuation Method

Today we are looking at how the Discounted Cash Flow (DCF) method is used to evaluate investment opportunities or project alternatives in big companies, like launching a new product, a new assembly line, etc. We can use the DCF method whenever we consider paying now to get more money (or Read more…

## Creating a Variance Analysis Model – Part 2

This article builds upon the theory discussed in Creating a Variance Analysis Model – Part 1. Be sure to read this article before looking at the more practical examples below. Building a Variance Analysis Model in Excel Let’s create an Excel model to perform our variance analysis. For the exercise, we Read more…

## Creating a Variance Analysis Model – Part 1

Today we will take a more detailed look at Variance Analysis. In this article, we will deal with the theory, and in next week’s article, we will build an Excel model to look more practically at the subject. Variance Analysis Variance analysis looks at the differences between planned and actual Read more…

## DuPont Model for Business Analysis

It was 1912, and Donaldson Brown was working as an explosives salesman for the DuPont Corporation. About that time, the company treasurer John Raskob brought him into the financial activities of the company and encouraged him to use statistics to evaluate the business performance of the various activities under the Read more…

## The Altman Z-Score Analysis

Today we are looking at a more complex financial analysis model – the Altman Z-Score Analysis. But I promise, there’s a reward at the end of the article. The Z-score formula for predicting bankruptcy was published in 1968 by Edward Altman, Assistant Professor in the field of Finance in the Read more…

## Introduction to Financial Analysis

In today’s article, we will look at what Financial Analysis stands for, how to perform it and, most importantly, why it is essential for businesses. What is Financial Analysis? If you google the definition, what you get is something along the lines of Financial analysis is the assessment of the Read more…