Ratios in Accounting: Key Ratios from the Balance Sheet

If you do Financial Modeling you have to have some understanding of Accounting.
Here are some ratios that you need to know. They are part of the “survival kit”

Working Capital:

The Working Capital is the difference between the Current Assets and the Current Liabilities.
So: Working Capital = Current Assets – Current Liabilities

The Current Liabilities are the debt to be paid within the year.
The Cash Flows used to repay the debt come from the Current Assets.
Thus, the Working Capital is what is left to the company if all current debts are paid.

Risk exposure with Bonds: the Duration

What the hell is the “Duration”??

The Duration tells you how long, in years, it takes for the coupons to repay the price of a bond. It is the weighted average maturity of a bond’s cash flows or of any series of linked cash flows. The Macauley formula that gives a way to calculate the Duration goes like this:

Why is it important?

It is an important factor to know as it gives you a way to quantify the risk you bear in investing in bonds. Long term bonds have a higher Duration than short term bonds.

Add some neurons to Excel

Hi,

A human brain is 1400cc in size and 100 000 times slower than a modern computer. Yet Gary Kasparov managed to beat Deep Blue quite a few times since their first encounter in 1996. Even though the Word Champion has been defeated more recently, a human being has still inflicted severe defeats to the most advanced computer of its time. Impressive when we all know that computers are smarter, faster and better looking than we are?

Why is that?

Let’s say that modern computers are nothing more than giant calculators without a brain: they just calculate series of equations without too much of interaction within the equations. Such an architecture requires CPUs to be fast. They also consume a lot of energy and generate a lot of heat (sometimes leading you to unexpected reboots)

Triming your data in Excel

Everyday I am a bit more happy with this blog. The WordPress team did a great job as it is reliable and it’s bundled with useful features. You’re going to ask me: what’s the link between WordPress and Excel?

Well: Thanks to WordPress I know what you are looking when you use the search engine in the top right corner.

Even though this won’t be enough for me to take on Google and Yahoo this is more than enough to know that some of you have problems manipulating text fields in Excel. Apparently you are looking for a “Between” function in excel to get info from a cell.

Key Performance Indicator using REPT()

Hi,

I recently wanted to display some information in a table using conditional formatting for ease of reading.
I eventually ended up using the function rept().

It looked just like that: