Monthly Cash Flow Forecast Model With a rolling monthly cash flow forecast, the number of periods in the forecast remains constant (e.g., 12 months, 18 months, etc.). The forecast is rolled forward every time there is a month of historical data to input. Rolling forecasts work best when key cash flow drivers are modeled explicitly…
What is CapEx? CapEx (short for capital expenditures) is the money invested by a company in acquiring, maintaining, or improving fixed assets such as property, buildings, factories, equipment, and technology. CapEx is included in the cash flow statement section of a company’s three financial statements, but it can also be derived from the income statement…
LBO Modeling LBO Modeling is used to value a leveraged buyout (LBO) transaction where a target company is acquired using a significant amount of debt. The use of high leverage increases the potential returns on investors’ equity investments in the long-run. An LBO model is usually built in Excel to help investors properly evaluate the…
What is the National Association of Certified Valuators and Analysts (NACVA)? The National Association of Certified Valuators and Analysts, typically referred to as NACVA, was created to make it easier for a business looking to be appraised. NACVA offers a variety of services, one of the most important being certifications for business appraisers. It is…
What is the National Association of Federally-Insured Credit Unions (NAFCU)? The National Association of Federally-Insured Credit Unions (NAFCU) is a membership-based trade organization for credit unions insured by the federal government. In an overall effort to help the credit union industry grow, NAFCU works with its member credit unions, acting as a representative and assistant,…
What is the National Association of Investors Corporation (NAIC)? The National Association of Investors Corporation (NAIC) was first founded in 1951 as the National Association of Investment Clubs. Today, the NAIC conducts its business as BetterInvesting. The NAIC works as a sort of school/think tank. It offers broad investment advice, educational information, and support that…
What is the National Association of Securities Dealers (NASD)? The National Association of Securities Dealers (NASD) was a regulatory body responsible for overseeing the securities industry. It was tasked with both the operation and regulation of all securities exchange market trades, as well as over-the-counter (OTC) market trades. Founded in 1939 – using…
What is Near Money? Near money is a term used to describe non-cash assets that are very liquid and that are easily convertible into cash. It is also referred to as quasi-money or cash equivalents. Examples of near money are: Savings accounts Government treasury securities (T-bills) Money market securities Liquid foreign currencies (US dollar, Japanese…
What is Scenario Analysis vs Sensitivity Analysis? To understand scenario analysis vs sensitivity analysis, one should first understand that investment decisions are based on a set of assumptions and inputs. The lack of certainty in the premises and inputs brings about investment risk. Before making an investment, an individual assesses the magnitude of such risks…
What is Asset Coverage Ratio? The asset coverage ratio is a financial metric that indicates how a company can potentially settle its debts by selling its tangible assets. The ratio is used to evaluate the solvency of a company and helps lenders, investors, management, regulatory bodies, etc. determine how risky a particular company is. The…
