What is an LBO Model? An LBO model is a financial tool typically built in Excel to evaluate a leveraged buyout (LBO) transaction, which is the acquisition of a company that is funded using a significant amount of debt. Both the assets of a company being acquired and those of the acquiring company are used…
The Foundations of Real Estate Financial Modeling This guide will outline the foundations of real estate financial modeling and the key concepts you need to get started building your own models for development projects. In order to get started, we will begin by defining some of the key terms you’ll need to know before building…
What is a Debt Schedule? A debt schedule lays out all of the debt a business has in a schedule based on its maturity. It is typically used by businesses to construct a cash flow analysis. As shown in the graphic below, interest expense in the debt schedule flows into the income statement, the closing…
What is Real Estate Financial Analysis? This is an excerpt from CFI’s Real Estate Financial Modeling Course. We will begin our real estate financial analysis by calculating the net operating income (NOI). Below are some assumptions for the real estate model: 1. First, we will calculate the gross revenue. Gross Revenue = Average Unit Size…
What is Net Domestic Product (NDP)? Net domestic product (NDP) measures the economic output of a country. It represents the net book value of all finished goods and services produced inside a country geographically during a given period. NDP is a key indicator of a country’s economic growth, which is released by the Bureau of…
What is Financial Compliance? Financial compliance is the regulation and enforcement of the laws and rules in finance and the capital markets. It ranges through the entire financial spectrum, from investment banking practices to retail banking practices. ` Why is Financial Compliance Important? In the aftermath of the 2008 Global Financial Crisis, financial compliance became…
What is Vega Neutral? Vega neutral is a risk management strategy for options trading that aims to create a portfolio with a total vega of zero. Vega represents the sensitivity of the price of an option to the implied volatility of the underlying asset. It is one of “the Greeks” of options trading. Understanding the…
What is the Equal Credit Opportunity Act (ECOA)? The Equal Credit Opportunity Act (ECOA) is a law that was passed in October 1974 in the United States of America. The law makes it unlawful for creditors to discriminate against any applicant on the basis of race, religion, color, national origin, marital status, sex, or age….
What is the Vancouver Stock Exchange (VSE)? The Vancouver Stock Exchange (VSE) started operations out of Vancouver, British Columbia in 1907. The VSE continued to function as a standalone exchange until November 1999, when it was merged with other stock exchanges to create the Toronto Ventures Exchange (TSX-V). The VSE was home to mainly small-cap…
What is FCFF (Free Cash Flow to Firm)? FCFF, or Free Cash Flow to Firm, is the cash flow available to all funding providers (debt holders, preferred stockholders, common stockholders, convertible bond investors, etc.). It is also known as unlevered free cash flow and represents the surplus cash flow available to a business if it were debt-free. A…
