Guides and explainers
In-depth guides on valuation, financial modeling, M&A, leveraged buyouts and project finance, plus plain-English explainers of the finance terms people search for most.
In-depth guides
Longer reads with diagrams, worked examples and the mistakes to avoid.
Business valuation explained: methods, steps and common mistakes
How to work out what a business is worth, step by step, in plain language.
10 min readRead the guideFinancial modeling explained: how to build a 3-statement model
How a financial model is built, how the three statements connect, and how to avoid the usual errors.
9 min readRead the guideMergers and acquisitions explained: the process from strategy to integration
What happens in a merger or acquisition, from the first idea to the first 100 days.
10 min readRead the guideLeveraged buyout (LBO) explained: how it works and where returns come from
How private equity buys companies with borrowed money, with a worked example.
9 min readRead the guideProject finance explained: structure, risks, debt sizing and modeling
How large projects are funded from their own cash flow, and how lenders decide how much to lend.
10 min readRead the guideConcept explainers
Short, clear answers to questions such as what is beta, what is alpha and what is terminal value.
What is beta in finance?
Beta measures how much a share, or a business, tends to move compared with the overall market.
Read the explainerWhat is alpha in finance?
Alpha is the return an investment earns above what its risk would predict.
Read the explainerWhat is a DCF (discounted cash flow)?
A discounted cash flow (DCF) valuation estimates what a business is worth today by forecasting its future free cash flows and discounting them back at a rate that reflects risk.
Read the explainerWhat is terminal value?
Terminal value is the value of a business beyond the years you forecast in detail.
Read the explainerWhat is WACC (weighted average cost of capital)?
WACC, the weighted average cost of capital, is the average return that a business's lenders and owners together require.
Read the explainerWhat is CAPM and the cost of equity?
The cost of equity is the return shareholders expect for owning a business.
Read the explainerWhat is EBITDA?
EBITDA stands for earnings before interest, tax, depreciation and amortisation.
Read the explainerWhat is enterprise value?
Enterprise value (EV) is the value of a whole business to everyone who has funded it: shareholders and lenders.
Read the explainerWhat is free cash flow (FCF)?
Free cash flow (FCF) is the cash a business generates after paying its operating costs, tax and the investment needed to maintain and grow the business.
Read the explainerWhat is IRR (internal rate of return)?
The internal rate of return (IRR) is the yearly return an investment earns, taking into account when cash goes in and when it comes out.
Read the explainerWhat is NPV (net present value)?
Net present value (NPV) is the value today of all an investment's future cash flows, minus the amount invested.
Read the explainerWhat are valuation multiples (EV/EBITDA, P/E)?
A valuation multiple is a ratio that compares a company's value with a measure of its performance, such as earnings or sales.
Read the explainerWhat is the Sharpe ratio?
The Sharpe ratio measures how much extra return an investment earns for each unit of risk taken.
Read the explainerWhat is DSCR (debt service coverage ratio)?
The debt service coverage ratio (DSCR) shows whether a business or project earns enough cash to pay its loan instalments.
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