Performing a DCF Analysis (infographic) This DCF analysis infographic walks you through the process, step by step, of how to build a discounted cash flow (DCF) model to value a business. A discounted cash flow model takes into account all the factors that could affect a company’s current and future performance. The performance equates…
What is Accretion Dilution Analysis? Accretion and Dilution refer to a simple test that determines the impact of an acquisition or merger on the buying firm’s Earnings per Share (EPS). Accretion Dilution analysis helps the acquirer (buyer) weigh the consequences of the merger, incorporating all factors and complexities. Image from CFI’s M&A financial modeling…
What is Merger Consequences Analysis? Merger consequences analysis is important for assessing the impact of an M&A transaction. When the leadership/owners of a sufficiently sized company are pitched a merger or acquisition proposal, the company needs to take into consideration the financial impact that the transaction may have on the acquirer’s pro forma financial position….
What is an Asset-Backed Commercial Paper (ABCP)? An asset-backed commercial paper (ABCP) is a type of commercial paper that is collateralized by financial assets. Commercial paper is a short-term monetary-market debt instrument with a maturity of no more than 270 days. It is usually issued by a large corporation or financial institution to pay for…
Business Valuation Framework Over the years, I’ve spent a lot of time thinking about and working on business valuations across a broad range of transactions. Given that I’m a visual learner, I thought it would be helpful to illustrate my thoughts in a diagram with the valuation infographic. Top Down vs. Bottom Up As I…
What is Annualized Rate of Return? Annualized rate of return is a way of calculating investment returns on an annual basis. As we invest, we often want to know how much we are earning from our investments. When we calculate our investment earnings over time, it is known as the rate of return. However, investments…
What is a Stimulus Check? A stimulus check is a check sent to taxpaying consumers by a government. Stimulus checks are given to boost the economy by providing consumers with funds to spend. Consumer spending is an essential component of a healthy economy and, in times of economic uncertainty, it usually contracts. Therefore, the government…
What is the Asian Financial Crisis? The Asian Financial Crisis is a crisis caused by the collapse of the currency exchange rate and hot money bubble. It started in Thailand in July 1997 and swept over East and Southeast Asia. The financial crisis heavily damaged currency values, stock markets, and other asset prices in many…
Real Estate Financial Modeling Our Real Estate Financial Modeling (REFM) course is designed to teach you how to build a development model in Excel from the ground up. Real estate developers need to build dynamic cash flow models to analyze investment opportunities. They are specifically designed to accommodate changes in key assumptions, such as land acquisition cost, interest…
What is Neoclassical Economics? Neoclassical economics is a broad approach that attempts to explain the production, pricing, consumption of goods and services, and income distribution through supply and demand. It integrates the cost-of-production theory from classical economics with the concept of utility maximization and marginalism. Neoclassical economics includes the work of Stanley Jevons, Maria Edgeworth,…
