Integrated 3-Statement Modeling Guide (Step-by-Step)
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Income Statement Projection Guide
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Balance Sheet Projection Guide
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Profit Margin Types (Ratio Analysis)
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ROIC: Fundamental Valuation Metric
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CAGR Calculator (Step-by-Step)
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Liquidity Ratio Analysis Tutorial
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Solvency Ratio Guide
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Operating Leverage (Fixed vs. Variable Costs)
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All Financial Modeling Content
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A/P Days
A/P DaysWhat is A/P Days? A/P Days counts the average number of days it takes for a company to fulfill an invoice from suppliers or vendors for orders placed using credit.
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A/R Days
A/R DaysWhat is A/R Days? The A/R Days measures the approximate number of days in which a company needs to retrieve cash from customers that paid using credit.
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Accounts Payables Turnover
Accounts Payables TurnoverWhat is Accounts Payables Turnover? The Accounts Payables Turnover ratio measures how often a company repays creditors such as suppliers on average to fulfill its outstanding payment obligations.
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Accounts Receivables Turnover
Accounts Receivables TurnoverWhat is Accounts Receivables Turnover? The Accounts Receivables Turnover ratio estimates the number of times per year a company collects cash payments owed from customers who had paid using credit.
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Amazon Valuation Model (AMZN)
Amazon Valuation Model (AMZN)What is the Valuation of Amazon? Amazon (NASDAQ: AMZN) is an e-commerce company that offers online retail shopping and advertising services to consumers, as well as serving enterprises through Amazon...
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Average Revenue Per User (ARPU)
Average Revenue Per User (ARPU)What is ARPU? The Average Revenue Per User (ARPU) quantifies the amount of revenue generated on average from each customer. The implied ARPU can be calculated by dividing the total amount of revenue g...
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Average Selling Price (ASP)
Average Selling Price (ASP)What is Average Selling Price? The Average Selling Price (ASP) is a financial metric that measures the approximate amount paid by a customer to purchase a specific product.
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Balance Sheet Projection Guide
Balance Sheet Projection GuideIn a finance and investment banking interview, candidates will almost certainly be asked questions that test their understanding of the relationship between the balance sheet income statement, and cas...
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Balance Sheet Projection Guide
Balance Sheet Projection GuideHow to Forecast the Balance Sheet? Imagine that we are tasked with building a 3-statement statement model for Apple. Based on analyst research and management guidance, we have completed the company’s...
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Calendarization
CalendarizationWhat is Calendarization? Calendarization is the adjustment of a company’s financial data and operating performance to align with the calendar year-end date, i.e. December 31.
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Capitalization Ratio
Capitalization RatioWhat is Capitalization Ratio? The Capitalization Ratio refers to the proportion of a company’s operations funded by debt and is used to assess its credit risk profile.
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Cash Flow Adequacy Ratio
Cash Flow Adequacy RatioWhat is the Cash Flow Adequacy Ratio? The Cash Flow Adequacy Ratio determines if the cash flows generated by a company are sufficient to pay for its recurring expenses. The cash flow adequacy ratio me...
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Compound Annual Growth Rate (CAGR)
Compound Annual Growth Rate (CAGR)What is CAGR? CAGR, an abbreviation for “Compound Annual Growth Rate”, measures the annualized rate of growth in the value of an investment or financial metric over a stated period. Concep...
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Debt to Asset Ratio
Debt to Asset RatioWhat is Debt to Asset Ratio? The Debt to Asset Ratio, or “debt ratio”, is a solvency ratio used to determine the proportion of a company’s assets funded by debt rather than equity.
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Default Risk Premium
Default Risk PremiumWhat is Default Risk Premium? The Default Risk Premium (DRP) measures the incremental return that investors require as compensation for undertaking the risk of holding a risky security, such as a corp...
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Defensive Interval Ratio (DIR)
Defensive Interval Ratio (DIR)What is the Defensive Interval Ratio? The Defensive Interval Ratio (DIR) is a near-term liquidity ratio used to count the number of days that a company can operate using its liquid assets on hand. The...
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Degree of Financial Leverage (DFL)
Degree of Financial Leverage (DFL)What is Degree of Financial Leverage? Degree of Financial Leverage (DFL) quantifies the sensitivity of a company’s net income (or EPS) to changes in its operating profit (EBIT) attributable to debt fi...
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Degree of Total Leverage (DTL)
Degree of Total Leverage (DTL)What is Degree of Total Leverage? The Degree of Total Leverage (DTL) ratio estimates the sensitivity of a company’s net income to changes in the number of units sold.
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FCF Margin
FCF MarginWhat is FCF Margin? The FCF Margin is a company’s operating cash flow minus its capital expenditures in a specified period, expressed as a percentage of revenue.
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Financial Modeling Guide
Financial Modeling GuideWhat is Financial Modeling? The Financial Modeling Best Practices are the industry-standard modeling conventions and tips to adhere to when building models in Excel. Following these general guidelines...
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Financial Modeling Techniques
Financial Modeling Techniques2017 Update: Click here for the new Ultimate Guide to Financial Modeling Conventions and Best Practices. Financial Modeling Techniques Because financial modeling requires a great deal of spreadsheet w...
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Fixed Asset Turnover Ratio
Fixed Asset Turnover RatioWhat is Fixed Asset Turnover Ratio? The Fixed Asset Turnover Ratio measures the efficiency at which a company is capable of utilizing its long-term fixed asset base (PP&E) to generate revenue.
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FP&A Guide
FP&A GuideWhat is FP&A? Understand Financial Planning and Analysis Financial planning and analysis (FP&A) is a group within a company’s finance organization that provides senior management with a foreca...
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FP&A Career Path and Salary Guide
FP&A Career Path and Salary GuideThe FP&A career path The FP&A career path starts at the analyst level and progresses to director of FP&A: FP&A Analyst Senior FP&A Analyst FP&A Manager Director/VP, FP&A Th...
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Gearing Ratio
Gearing RatioWhat is Gearing Ratio? The Gearing Ratio measures a company’s financial leverage stemming from its capital structure decisions.
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How to Build an 3-Statement Model
How to Build an 3-Statement ModelHow to Build an Integrated 3-Statement Model An integrated 3-statement financial model is a type of model that forecasts a company’s income statement, balance sheet and cash flow statement. While acco...
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Income Statement Projection Guide
Income Statement Projection GuideHow to Forecast the Income Statement? Forecasting the income statement is a key part of building a 3-statement model because it drives much of the balance sheet and cash flow statement forecasts. In t...
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Inventory Days
Inventory DaysWhat is Inventory Days? Inventory Days measures the average amount of time in which a company’s inventory is held on hand until it is sold.
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Is Wall Street Prep Worth It?
Is Wall Street Prep Worth It?Is Wall Street Prep Worth It? Trainees that complete Wall Street Prep’s Premium Package or live seminars are eligible for Wall Street Prep’s Certification in Financial & Valuation Mode...
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Last Twelve Months (LTM)
Last Twelve Months (LTM)What is LTM? LTM is shorthand for “last twelve months” and refers to the timeframe comprised of the financial performance of the most recent twelve-month period.
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Markup
MarkupWhat is a Markup? A Markup refers to the difference between a product’s average selling price (ASP) and the corresponding unit cost, i.e. the cost of production on a per-unit basis.
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Markup Percentage
Markup PercentageWhat is the Markup Percentage? The Markup Percentage represents the excess average selling price (ASP) per unit over the cost per unit. In order for a good or service to be profitable, companies must...
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Mid-Year Convention
Mid-Year ConventionWhat is the Mid-Year Convention? The Mid-Year Convention treats forecasted free cash flows (FCFs) as if they were generated at the midpoint of the period. Since the cash inflows and outflows occur con...
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Month over Month Growth (M/M)
Month over Month Growth (M/M)What is Month over Month Growth? Month over Month Growth (M/M) measures the rate of change in the value of a metric on a monthly basis, expressed as a percentage of the original value.
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Non-GAAP Earnings
Non-GAAP EarningsWhat are Non-GAAP Earnings? Non-GAAP Earnings are reported by public companies along with their GAAP financial statements. The Generally Accepted Accounting Principles (GAAP) are the standardized set...
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Non-Recurring Items
Non-Recurring ItemsWhat are Non-Recurring Items? Non-Recurring Items are gains and losses recognized on the income statement that must be adjusted, as they are neither part of ongoing core operations nor an accurate ref...
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NVIDIA Valuation Model (NVDA)
NVIDIA Valuation Model (NVDA)What is the Valuation of NVIDIA? In the following post, we’ll build a DCF valuation model for NVIDIA (NASDAQ: NVDA) to determine its intrinsic value and implied share price. NVIDIA, a pioneer in graph...
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Operating Cycle
Operating CycleWhat is the Operating Cycle? The Operating Cycle tracks the number of days between the initial date of inventory purchase and the receipt of cash payment from customer credit purchases.
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Overhead Rate
Overhead RateWhat is Overhead Rate? The Overhead Rate represents the proportion of a company’s revenue allocated to overhead costs, directly affecting its profit margins.
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Plowback Ratio
Plowback RatioWhat is the Plowback Ratio? The Plowback Ratio is the percentage of a company’s earnings retained and reinvested into operations as opposed to being paid out as dividends to shareholders.
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Return on Sales (ROS)
Return on Sales (ROS)What is Return on Sales? The Return on Sales (ROS) is a ratio used to determine the efficiency at which a company converts its sales into operating profit.
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Revolver Debt
Revolver DebtWhat is Revolver? In most 3-statement models, the revolving credit line, or “revolver”, acts as a plug to ensure that debt automatically gets drawn to handle projected losses. Cash does the same thing...
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Rolling Forecast Best Practices
Rolling Forecast Best PracticesA rolling forecast is a management tool that enables organizations to continuously plan (i.e. forecast) over a set time horizon. For example, if your company produces a plan for calendar year 2018, a...
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Should We Really Trust a DCF Model?
Should We Really Trust a DCF Model?How Accurate are DCF Models? The DCF model is used by investment bankers to present a framework to their clients that guides their decision-making process, rather than to precisely determine if a comp...
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Trailing Twelve Months (TTM)
Trailing Twelve Months (TTM)What is TTM? The Trailing Twelve Months (TTM) portrays a company’s financial performance across the past four quarters, i.e. the most recent 12-month period.
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Types of Financial Models
Types of Financial ModelsWhat are the Different Types of Financial Models? So, “What are the Different Types of Financial Models?”. The types of financial models constructed on the job are directly related to the...
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Working Capital Turnover Ratio
Working Capital Turnover RatioWhat is Working Capital Turnover? The Working Capital Turnover is a ratio that compares the net sales generated by a company to its net working capital (NWC).
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Year over Year (YoY)
Year over Year (YoY)What is YoY? Year over Year (YoY) growth measures the change in an annualized metric over two comparable periods, most often the current and prior period, as of the fiscal year-end date. By comparing...
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Year to Date (YTD)
Year to Date (YTD)What is Year to Date? YTD stands for “year to date” and represents the time period from the beginning of the fiscal year to the present date.
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