The most common financial modeling terms and definitions are: (1) Hardcodes – manually entered numbers, (2) Assumptions – independent variables in a model, (3) Three Statement Model – a fully linked income statement, balance sheet, and cash flow statement, (4) Capex – capital expenditures, (5) WACC – weighted average cost of capital, (6) DCF – discounted cash flow analysis, (7) Sensitivity Analysis – measuring changes in dependent variables based on changing assumptions, (8) LBO – a leveraged buyout using as much debt as possible, (9) Cash Sweep – when all excess cash is automatically swept towards some other use, (10) IRR – the internal rate of return from all cash flows of an investment.
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