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…
What is Maintenance Margin? Maintenance margin is the total amount of capital that must remain in an investment account in order to hold an investment or trading position and avoid a margin call. To better understand what a maintenance margin is, it’s important to review the underlying concepts of margin accounts and margin calls. Breaking…
What is a Personal Budget Spreadsheet? A personal budget spreadsheet offers an individual a way to determine the state of his finances and help him or her plan spending over the course of a period of usually a month or a year. It may very well be everyone’s best friend as it is the most helpful tool…
What is Investment Value? Investment value is the amount of money an investor would pay for a piece of property. It refers to an asset’s specific value based on certain parameters. Investment value represents an individual’s measurement of the asset’s property value. Potential investors often adopt an investment value metric when they decide to invest…
What are Valuation Principles? Business valuation involves the determination of the fair economic value of a company or business for various reasons such as sale value, divorce litigation, and the establishment of partner ownership. Image: CFI’s Business Valuation Modeling Course. Key Principles of Business Valuation The following are the key principles of business…
What is a Chartered Business Valuator (CBV)? Chartered Business Valuator (CBV) is the designation assigned to Canadian professionals by the Canadian Institute of Chartered Business Valuators (CICBV). The CBV designation denotes an individual with experience and expertise in the financial valuation of a business. Learn more at cicbv.ca. Image: CFI’s Business Valuation Modeling Course. Diving Deeper…
What is Paper Wealth? Paper wealth refers to an individual’s or company’s wealth, measured by assets that are listed on paper. In other words, paper wealth is a speculated amount of wealth, determined as the money that could potentially be generated when the assets of an individual or company are sold. Paper Wealth vs. “Real”…
When to Use “To Whom It May Concern”? Although the phrase “To Whom It May Concern” was a popular introductory greeting in the traditional workplace, the term has since become outdated in the modern setting. The emergence of new communication trends such as the internet and online address books has made it easier to find…
