1173 Posts Found

A four-part series that aims to guide you through the components necessary for building your own financial model from scratch:
Part 1: The Why and What of Financial Modeling
Part 2: Assumptions
Part 3: Income Statement and Custom Detail Tabs
Part 4: Cash Flow, Balance Sheet and Keeping the Model Updated

Content: Article | Authors: Troy Henikoff, Will Little | Source: Techstars | Subjects: Entrepreneurship, Finance

The paper describes how strategic decisions can benefit from analysis using techniques drawn from both real options and game theory. It explains the trade-off between flexibility and strategic commitment and offers a toolkit for making choices in competitive markets.

Content: Article | Authors: Jayanti Kar, Lenos Trigeorgis, Nelson Ferreira | Source: McKinsey & Company Inc. | Subject: Finance

When a business has a steady customer base, it’s easy for it to make estimations and projections. But that task is very difficult for companies that are non-contractual, meaning they have customers with inconsistent buying patterns. Wharton marketing professor Peter Fader and Wharton doctoral student Dan McCarthy are looking to close the data gap in their new research paper titled, “Valuing Non-Contractual Firms Using Common … [ Read more ]

Content: Article | Author: Peter Fader | Source: Knowledge@Wharton | Subjects: Customer Related, Finance

People are irrationally motivated to complete arbitrary sets of tasks, donations, or purchases—and organizations can take advantage of that, according to new research by Kate Barasz, Leslie John, Elizabeth Keenan, and Michael Norton.

Content: Article | Authors: Carmen Nobel, Michael I. Norton | Source: Harvard Business School (HBS) Working Knowledge | Subjects: Customer Related, Market/Investment

[Mike Maples] spent many years watching people fight to move expenses to other teams, claim revenue for their own team, or even fight against the price of shared corporate services. This “allocation” dynamic is extreme “finance gymnastics” that grows exponentially complex as the business cross-dependencies grow. Ultimately the meaning of P&Ls derived from allocations becomes the undoing of most rational thought in an organization — hiring, investing, … [ Read more ]

Content: Quotation | Author: Steven Sinofsky | Source: Medium | Subjects: Accounting, Finance, Management, Organizational Behavior

Going back to the history of accounting, a P&L is a tool used by executives to inform decisions around resource and capital allocation, pricing, etc. In a large organization, it is very difficult to assign revenue and costs to a specific unit within a company and even more difficult to offer true span of control or accountability to a unit leader. The creation of P&Ls … [ Read more ]

Content: Quotation | Author: Steven Sinofsky | Source: Medium | Subjects: Accounting, Finance, Management, Organizational Behavior

With these 10 principles for rethinking cost management, you can maximize value and avoid threats from Wall Street.

Content: Article | Authors: Deniz Caglar, Gary L. Neilson, Vinay Couto | Source: strategy+business | Subjects: Finance, Management

How the people behind the roles that shape your world think.

Editor’s Note: I fail to see the need for this distinction or the need (or even the desire) to separate how and what, but I still found the article to be an interesting read.

Content: Article | Author: Julia Mitelman | Source: Medium | Subjects: Management, Market/Investment, Strategy

Borrowed money causes more people to go broke than anything else. Charlie Munger has said, smart people “go broke from liquor, ladies and leverage”

Content: Quotation | Authors: Charlie Munger, Warren Buffett | Subjects: Finance, Personal Development

Data and business go hand in hand. And whether you’re analyzing a client’s data or using your company’s data to make executive decisions, your tools have to be able to handle the tasks you perform with that information.

If you’re a data analyst, most of the time you go through these stages of data analysis:
– Data Cleaning: Transform and rearrange the data in a way suitable … [ Read more ]

Content: Article | Author: Orlando Mezquita | Source: Investintech.com | Subjects: Finance, Productivity / Work Tips

Investments can have the same internal rate of return for different reasons. A breakdown of this metric in private equity shows why it matters.

Content: Article | Authors: Cindy Levy, Marc H. Goedhart, Paul Morgan | Source: McKinsey Quarterly | Subject: Finance

The venerable technique has vaulted back into the consciousness of corporate leaders—for good reason. But getting it right is not easy and depends on five key elements.

Content: Article | Authors: Kyle Hawke, Matt Fitzpatrick | Source: McKinsey Quarterly | Subjects: Finance, Management

Our research shows that even if short-term investors cause day-to-day fluctuations in a company’s share price and dominate quarterly earnings calls, longer-term investors are the ones who align market prices with intrinsic value.

Content: Quotation | Authors: David Wessels, Marc H. Goedhart, Tim Koller | Source: McKinsey Quarterly | Subjects: Economics, Market/Investment

There are several ratios you can look at that will help you evaluate whether your company can generate sales and control its expenses. I talked with Joe Knight, author of the HBR TOOLS: Return on Investment and co-founder and owner of Content: Article | Author: Amy Gallo | Source: Harvard Business Review | Subject: Finance

Any time you propose a capital expenditure, you can be sure senior leaders will want to know what the return on investment (ROI) is. There are a variety of methods you can use to calculate ROI — net present value, payback, breakeven — and internal rate of return, or IRR.

For help in deciphering this I talked with Joe Knight, author of HBR TOOLS: Return on … [ Read more ]

Content: Article | Author: Amy Gallo | Source: Harvard Business Review | Subject: Finance

Calculating a company’s relative performance … is not straightforward, and for at least two reasons. First, we wish to capture the performance of the company that is a function of those factors most subject to the company’s control. When it comes to assessing a company’s historical performance, we typically wish to separate out the material impact that year, industry, and company size have on profitability. … [ Read more ]

Content: Quotation | Authors: Michael E. Raynor, Mumtaz Ahmed, Rob Del Vicario | Source: Deloitte Review | Subjects: Finance, Management

In 1970, in “Efficient Capital Markets: a Review of Theory and Empirical Work,” Gene Fama defined a market to be “informationally efficient” if prices at each moment incorporate all available information about future values. Informational efficiency is a natural consequence of competition, relatively free entry, and low costs of information. If there is a signal, not incorporated in market prices, that future values will be … [ Read more ]

Content: Quotation | Author: John H. Cochrane | Source: Capital Ideas | Subjects: Economics, Finance

For better goal-setting, it will help to understand where financial targets typically come from. Often, they’re based on past performance. But a company’s recent track record says nothing about how much its performance could or should improve; what’s needed is a useful assessment of a company’s probability of future success. One way to think about the likelihood of hitting a given performance increase is to … [ Read more ]

Content: Article | Author: Michael E. Raynor | Source: Harvard Business Review | Subjects: Finance, Management

Shareholder value or profits are measures, not goals in and of themselves. It’s hard to wake up in the morning and get excited about creating shareholder value.

Content: Quotation | Author: Brian J. Hall | Source: Harvard Business School (HBS) Working Knowledge | Subjects: Finance, Management

One simple but powerful approach some multibusiness managers are using today is to sort their individual businesses into three broad portfolio categories: sources of growth (future earnings); sources of current and intermediate earnings; and sources of immediate cash flow. One of my colleagues has suggested that these categories relate directly to the so-called product lifecycle curve which can also, for these purposes, be termed a … [ Read more ]

Content: Quotation | Author: Louis V. Gerstner | Source: McKinsey Quarterly | Subjects: Finance, Management