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Cost-Benefit Analysis Formula + Calculator

WEBCost-Benefit Analysis refers to a capital budgeting ratio wherein the estimated costs and benefits of a project are compared to determine its economic …

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Occupancy Cost Percentage Formula + Calculator

WEBThe occupancy cost percentage, or “health ratio”, measures the total occupancy cost incurred by a tenant relative to the gross sales generated at the …

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Interest Coverage Ratio (ICR) Formula + Calculator

WEBHigher Interest Coverage Ratio → For interest coverage ratios, however, the lower the figure, the riskier the credit health of the borrower – which is the opposite of …

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CVS Health to Acquire Aetna; Combination to Provide …

WEBhealth in more affordable and effective ways. This unique integrated model increases access to quality care, delivers better health outcomes and lowers overall health care …

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Altman Z-Score Formula + Calculator

WEBThe original z-score formula intended for public manufacturing companies is shown below: Altman Z-Score = (1.2 × X1) + (1.4 × X2) + (3.3 × X3) + (0.6 × X4) + (0.99 …

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The Rule of 40 (Brad Feld) SaaS Formula + Calculator

WEBThe Rule of 40 – popularized by Brad Feld – states that an SaaS company’s revenue growth rate plus profit margin should be equal to or exceed 40%. The Rule of …

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Year over Year (YoY) Formula + Calculator

WEBWhat is YoY? The Year over Year (YoY) growth is the percentage change in an annualized metric over two comparable periods, most often the current and prior …

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Credit Analysis Financial Ratios + Lending Process

WEBCredit Analysis is the process of evaluating the creditworthiness of a borrower using financial ratios and fundamental diligence (e.g. capital structure). Often, …

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Return on Investment (ROI) Formula + Calculator

WEBNet Return = $75m – $50m = $25m. The net return of $25 million is then divided by the cost of investment to arrive at the return on investment (ROI). Return on …

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Comparable Company Analysis Trading Comps Tutorial

WEBComparable Company Analysis Overview (Step-by-Step) Step 1. Compile Peer Group → The first step is to select the peer group, which will be composed of …

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Asset Sale vs. Stock Sale M&A Transaction Structure

WEBThe answer depends on whether the deal is structured legally as a stock sale or as an asset sale. Broadly speaking: Stock Sale: In a stock sale, the seller gives the …

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Cash and Cash Equivalents Definition + Examples

WEBCash and Cash Equivalents in Financial Modeling. Long-term investments are technically not current assets.However, considering the liquidity of the long-term …

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Working Capital Formula + Calculator

WEBThe working capital ratio is a method of analyzing the financial state of a company by measuring its current assets as a proportion of its current liabilities, rather …

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Current Ratio Formula + Calculator

WEBCurrent Assets = $25 million + $20 million + $10 million + $60 million = $115 million. Current Liabilities = $55 million + $60 million = $115 million. For the last step, …

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Capitalization Ratio Formula + Calculator

WEBThe debt-to-capital ratio is insufficient as a standalone metric to understand a company’s true financial health. For instance, a company can utilize minimal debt …

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Burn Rate Formula + Calculator

WEB1. Early-Stage Startup Operating Assumptions. Suppose we’re tasked with measuring the burn rate and implied runway of an early-stage start-up, with $500k in …

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Financial Leverage Formula + Calculator

WEBBy calculating the average balance of our company’s total assets and dividing by its total shareholders’ equity, we arrive at a financial leverage ratio of 1.5x. …

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Statement of Owner’s Equity Definition + Example

WEBThe statement of owner’s equity, also known as the “statement of shareholder’s equity”, is a financial document meant to offer further transparency into …

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Fixed Charge Coverage Ratio (FCCR) Formula + Calculator

WEBTotal Fixed Charges = $2.25 million + $4 million = $6.25 million. In the final step, we can now calculate the fixed charge coverage ratio by dividing the Covenant …

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COGS vs. Operating Expenses Difference + Examples

WEBCOGS → The cost of goods sold (COGS) line item represents the direct cost of selling products/services to customers. Some common examples of costs included in …

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How are the Three Financial Statements Linked

WEBEnding Retained Earnings = $15 million + $21 million = $36 million. In conclusion, we’ll confirm our three financial statements are linked correctly by inserting a …

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Balance Sheet Forecasting Step-by-Step Guide

WEBApproach 1: Use equity research or management guidance when available. Approach 2: In the absence of guidance, look at historical purchases (disclosed in the …

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