What is the Q Ratio? The Q Ratio, or Tobin’s Q Ratio, is a ratio between a physical asset’s market value and its replacement value. The ratio was developed by James Tobin, a Nobel laureate in economics. Tobin suggested a hypothesis that the combined market value of all companies on the stock market should be…
What is Free Cash Flow to Equity (FCFE)? Free cash flow to equity (FCFE) is the amount of cash a business generates that is available to be potentially distributed to shareholders. It is calculated as Cash from Operations less Capital Expenditures plus net debt issued. This guide will provide a detailed explanation of why it’s…
Debt Service Coverage Ratio Template Debt Service Coverage Ratio (DSCR) measures the ability of a company to use its operating income to repay all its debt obligations, including repayment of principal and interest on both short-term and long-term debt. DSCR is often used when a company has any borrowings on its balance sheet such as…
The Four Main Types of Budgets and Budgeting Methods There are four common types of budgets that companies use: (1) incremental, (2) activity-based, (3) value proposition, and (4) zero-based. These four budgeting methods each have their own advantages and disadvantages, which will be discussed in more detail in this guide. Source: CFI’s Budgeting & Forecasting…
What is Bad Debt? First, let’s determine what the term bad debt means. Sometimes, at the end of the fiscal period, when a company goes to prepare its financial statements, it needs to determine what portion of its receivables is collectible. The portion that a company believes is uncollectible is what is called “bad debt…
Product Costs Template This Product Costs Template will help break down the Product Costs into the costs of Direct Material (DM), Direct Labor, and Manufacturing Overhead (MOH). These are the direct costs of producing the product. Here is what the template looks like: Download the Free Template Enter your name and email in the form…
Gross Profit Calculator This Gross Profit Calculator will help you visualize how to achieve the Gross Profit value on the Income Statement. Gross Profit is achieved by subtracting Cost of Goods Sold (COGS) from Revenue. Here is what the template looks like: Download the Free Template Enter your name and email in the form below…
CAGR Calculator CAGR stands for the Compound Annual Growth Rate. This CAGR calculator will help you determine the Compound Annual Growth rate of an investment. CAGR is a great measure of growth, as it isolates the effect of compounding on growth, which is sometimes concealed on other metrics for growth. Here is what the calculator…
FCFF vs FCFE There are two types of Free Cash Flows: Free Cash Flow to Firm (FCFF) (also referred to as Unlevered Free Cash Flow) and Free Cash Flow to Equity (FCFE), commonly referred to as Levered Free Cash Flow. It is important to understand the difference between FCFF vs FCFE, as the discount rate…
