Data & Finance for Work & Life
If you’ve ever signed a contract and wondered if the shown price reflected what you actually pay, you’re familiar with “other costs.” For example… When you purchase a home, sometimes you’re charged strange processing, notary, and transfer fees. When you buy a car, you might find out that there’s a title transfer fee that wasn’t […]
Other Costs (Other Expenses): Definition, Examples & Formula Read More »
Finance is all about returns. What are the earnings paid to financial sponsors? How much cash can a new venture bring to the company? Financial analysts always look for ways to maximize cash earned per dollar spent. This basic concept is called return on investment. Return on investment is equal to [earning – investment]/[investment]. However,
Interest Yield: Definition, Formula, Examples & Calculator Read More »
“Price range” sounds intuitive, and most of us have an idea what it means in our daily lives. But outside restaurants, hotels, and used cars, the term comes up in business, where it takes on a more nuanced meaning. In short, a price range is the spread of numbers between the lowest and the highest
What is a price range? Business Meaning, Synonyms & Examples Read More »
Even for experienced finance professionals, interest is a tough topic. Between fixed, variable, simple, accumulated, accrued, and others, I find myself needing a review from time to time. Specifically, accrued interest and compound interest are easy to confuse because they both “grow” over time, just not in the same way. In this article we’ll define
Accrued Interest vs Compound Interest Read More »
Asset impairments are normal changes on a company’s balance sheet. They’re how accountants prudently reevaluate asset worth in alignment with the market. Specifically, when a company records an asset, they record it at the purchase price and depreciate its value over time. However, if price simulations indicate that the free market value (FMV) of the
Are asset impairments tax deductible? Read More »
If you’re anything like me, information about tax bases feels frustratingly opaque. While it’s critical for financial analysts to understand them, we usually leave tax topics to accountants. I’ve found that the easiest way to tackle tax base is starting with the tax base of assets. The tax base of an asset is a formal
Tax Base of Assets: Definition & Examples Read More »
Cash is king… but not every stakeholder sees cash the same way. For example, equity shareholders may want to know how much cash is available after paying loans and interest, whereas debt stakeholders want to know how much cash is available before loans and interest. These diverging needs for stakeholders has given birth to Free
Levered vs Unlevered Free Cash Flow: What’s the Difference? Read More »
What is the value of a company? Strictly speaking, company value is equal to equity on the balance sheet (aka book equity value). After all, equity is equal to total assets minus total liabilities, and it makes sense that a company worth its net assets — right? Not exactly. Net asset value ignores several key
What is enterprise value (EV) used for? (& Why It’s Important) Read More »
So you’re an accountant and you want to become a financial analyst? First thing’s first: know you have a huge advantage with a background in debits & credits. Many financial analysts don’t bother to understand double-entry accounting at all. On the other hand, you may find it difficult to conceptualize forward-looking, predictive analytics that financial
11 Steps to Transition from Accountant to Financial Analyst Read More »
If you’re new to finance, you may be wondering about the hype around so-called “financial statements.” To their users, financial statements are creative, holistic, and efficient representations not only of a company’s financial performance, but also its innermost business mechanics. Based on financial statements alone, users can deduce company performance, efficiency, competitiveness, and prospects. And
Financial Statements & their Utmost Importance to Users Read More »
