What is the Multiple-Period Dividend Discount Model? A multiple-period dividend discount model is a variation of the dividend discount model. It is often used in situations when an investor is expecting to buy a stock and hold it for a finite number of periods and sell the stock at the end of the holding period….
What is the Dividend Discount Model? The Dividend Discount Model (DDM) is a quantitative method of valuing a company’s stock price based on the assumption that the current fair price of a stock equals the sum of all of the company’s future dividends discounted back to their present value. Breaking Down the Dividend Discount Model…
The Excel VBA guide below explains Visual Basic for Applications (VBA), a programming language by Microsoft integrated into Office applications like Excel. VBA allows users to automate tasks, create custom functions, and enhance data analysis and financial modeling. Key uses include automating repetitive tasks, analyzing large datasets, and creating complex financial models. VBA is accessible…
Guide to the Discounted Cash Flow DCF Formula This article breaks down the discounted cash flow DCF formula into simple terms. We will take you through the calculation step by step so you can easily calculate it on your own. The DCF formula is required in financial modeling to determine the value of a business…
What is the Price Earnings Ratio? The Price Earnings Ratio (P/E Ratio) is the relationship between a company’s stock price and earnings per share (EPS). It is a popular ratio that gives investors a better sense of the value of the company. The P/E ratio shows the expectations of the market and is the price…
CFI’s Profit and Loss (P&L) template offers a free downloadable Excel file to create monthly and annual income statements. The template allows users to input their data, which then automatically generates financial statements. The following guide includes instructions for using and modifying the templates, highlighting key components like revenue, expenses, and net earnings. The tools…
What is the Proper Business Letter Format? A business letter should always follow a certain format and structure to ensure it is received as professional and up-to-standard. While there are many different types of business letters, this guide will go through a detailed example of the most classic business letter format. Business Letter Overview In…
What is the Free Cash Flow (FCF) Formula? The generic Free Cash Flow (FCF) Formula is equal to Cash from Operations minus Capital Expenditures. FCF represents the amount of cash generated by a business, after accounting for reinvestment in non-current capital assets by the company. This figure is also sometimes compared to Free Cash Flow to…
What is the NPV Formula? The NPV formula is a way of calculating the Net Present Value (NPV) of a series of cash flows based on a specified discount rate. The NPV formula can be very useful for financial analysis and financial modeling when determining the value of an investment (a company, a project, a cost-saving…
What is Knowledge vs. Wisdom? Knowledge vs. wisdom may be thought of as two sides of the same coin, but they are distinctly different things. Knowledge can simply be thought of as possessing “information,” while wisdom can be thought of as possessing “experience.” They are not mutually exclusive nor inherently inclusive: Knowledge is not required…
