The Complete Financial Metrics Resource: Tutorial, Usage Guide, Templates, and Handbook

What's new in Financial Metrics Pro V3?

• Hyperlink navigation throughout. Table of contents, chapter outlines, and cross-referenced terms take you to the reference with a mouse click.
• "Everything you wanted to know about IRR but were afraid to ask." Expanded and enhanced chapter on IRR explains in clear terms what IRR really means, how the IRR metric can be misused, and how it compares to the cost of debt, NPV, ROI, and other financial metrics.
• New, alternate approaches to many metrics. Implement payback period calculation , for instance either as a single cell formula, or use the simpler, easier-to-proofread approach with intermediate results.
• Expanded and improved Users Guide, with an emphasis on the essential characteristics of cash flow metrics and financial statement metrics.
• Special chapter on good practice in spreadsheet programming. Techniques that add credibility, usability, and professional appearance to spreadsheet models.
• Special chapter on naming cells and ranges (Excel 2007 version, only). An illustrated tutorial on naming. Make your formulas easier to read and check by assigning names for cells and ranges.

Financial Metrics Pro V3  Contents

Chapter 1.  Users Guide
•  Introduction to financial metrics
•  Cash flow metrics vs. financial statement metrics
    – Cash flow metrics
    – Financial statement metrics
•  Financial Metrics Pro purpose
•  Using the examples
    – Color code
    – Unlocking cells and modifying worksheets
    – Copying to other spreadsheets / breaking links
    – Adding or deleting cells, rows, or columns
    – Names for cells and cell ranges

Cash Flow Metrics

Chapter 2.  Cash Flow
•  Cash flow
•  Cash flwo vs. income and cost
•  Business case cash flow statements
•  Business case vs. financial accounting
    – Full value vs. incremental cash flow
    – Inflows vs. outflows
    – Other statement structures
•  Graphing cash flow

Chapter 3.  Cumulative Cash Flow for the Business Case
•  Cumulative cash flow
•  Cumulative cash flow vs. payback
•  Spreadsheet example: cumulative cash flow
•  Estimating payback from cumulative cash flow

Chapter 4. Payback Period
•  Payback period from net cash flow
•  Spreadsheet examples:  Payback from net cash flow
     – Example: 5 yrs, net cash flow
     − Example: 10 yrs, net cash flow
•  Payback from discounted cash flow
     – Example 5 yrs, discounted cash flow
     – Example 10 yrs, net cash flow
•  Spreadsheet examples:  Payback from simpler formulas and intermediate results
•  Payback period from graphs
•  Payback period strengths, weaknesses, and cautions
•  Discounted vs. non discounted payback
•  Mathematical basis for the payback calculation

Chapter 5. Discounted Cash Flow (DCF) and Net Present Value (NPV)
•  Present value from a single cash flow event
•  Net Present Value (NPV)
•  Spreadsheet example: Present value for a single cash flow event
•  Present value in algebraic terms
•  Choosing an interest rate for discounting
•  Present value from a cash flow stream
     – Spreadsheet example: NPV with year-end discounting
     – Spreadsheet example: NPV with mid-year discounting
     – Spreadsheet example: NPV with semiannual, quarterly, or monthly discounting
•  Using Excel's built in NPV function
•  NPV strengths, weaknesses, and cautions
•  Graphing net and discounted cash flow

Chapter 6. Compound Interest / Future Value
•  Compound Interest
•  Future value of a single cash flow event
•  Spreadsheet example: Future value of a single cash flow event
•  Future value in algebraic terms
•  Future value over a series of compounding periods (single cash flow event)
•  Spreadsheet examples:
     – FV with annual compounding
     – FV with compounding semiannually, quarterly, monthly, or daily (single cash flow event)
•  Continuous compounding
•  Compounding periods compared
•  Future value of an annuity
     – Spreadsheet example: fixed annuity
     – Excel's built in FV function
     – Spreadsheet example: FV for multiple cash flow events, variable amounts
       (including variable annuity)
•  Graphing compound interest growth

Chapter 7. Cumulative Average Growth Rate (CAGR)
•  Calculating cumulative average growth rate
•  Spreadsheet example: calculating CAGR
•  CAGR in algebraic terms
•  CAGR strengths, weaknesses, and cautions
•  CAGR example

Chapter 8. Return on Investment (ROI)
•  Return on Investment (ROI)
•  Simple ROI in algebraic form
•  Spreadsheet example: Simple return on investment (ROI)
•  Spreadsheet example: Simple return on investment:
•  Spreadsheet examples: Simple return on investment from cash flow
     – Simple ROI using intermediate results
     – Simple ROI using a single cell formula
•  ROI strengths, weaknesses, and cautions

Chapter 9. Internal Rate of Return (IRR)
•  Internal rate of return (IRR)
•  Internal rate of return (IRR) from a cash flow stream
•  Spreadsheet example: Excel's built in IRR function
     – Note on MIRR results
•  Modified internal rate of return (MIRR)
•  Spreadsheet example: Excel's MIRR function
     – Note on MIRR results
•  IRR strengths, weaknesses, and cautions
•  Graphical solution for IRR
•  IRR vs NPV vs ROI vs Cost of Debt. What does IRR really mean?
     – IRR: It's about recovering the cost of investing
     – IRR vs NPV
     – IRR vs NPV vs ROI
     – When IRR refuses to behave

Chapter 10.  Breakeven Analysis
•  Breakeven analysis
•  Simple breakeven analysis
     – Simple breakeven in algebraic terms
     – Spreadsheet example: Simple breakeven
     – Graphing breakeven analysis
•  Breakeven analysis with semi variable input (nonlinear breakeven)
     – Spreadsheet example: semi variable input
     – Mathematical basis for semi variable input analysis
     – Intermediate results for semi-variable input analysis
     – Graphing breakeven with semi-variable input

Financial Statement Metrics

Chapter 12. Income Statement
•  The income statement
•  Basic income statement equation
•  Income statement terms
•  Level of detail
•  Nonprofit organizations
•  Spreadsheet example: Income statement
•  Spreadsheet example: Income statement

Chapter 13. Balance Sheet
•  The balance sheet
•  Basic balance sheet equation
•  Balance sheet terms
•  Level of detail
•  Spreadsheet example: Balance sheet

Chapter 14. Changes in Financial Position (Cash Flow Statement)
•  Changes in financial position
•  Basic statement of changes in financial position equation
•  Spreadsheet example: Statement of changes in financial position

Chapter 15. Statement of Retained Earnings
•  Statement of retained earnings:
•  Basic retained earnings equation
•  Spreadsheet example: Statement of retained earnings

Chapter 16. Liquidity Metrics
•  Liquidity metrics
•  Liquidity metrics: General approach and set up data
•  Working capital
•  Current ratio (working capital ratio)
•  Quick ratio (acid test ratio) 

Chapter 17. Activity and Efficiency Metrics
•  Activity and efficiency metrics
•  General approach and set up data
•  Sales revenue per employee
•  Inventory turns
•  Days sales in inventory (average turnover period)
•  Accounts receivable turnover
•  Average collection period (days sales outstanding)
•  Total asset turnover
•  Fixed asset turnover

Chapter 18. Leverage Metrics
•  Leverage metrics: creditors vs. owners
•  General approach and set up data
•  Total debt to total assets ratio
•  Debt to equity ratios
•  Total debt to stockholders equity
•  Long term debt to stockholders equity
•  Times interest earned

Chapter 19. Profitability Metrics
•  Profitability metrics
•  General approach and set up data
•  Profit margin on sales
•  Operating profit margin 
•  Operating profit before taxes
•  Operating profit after taxes
•  Gross profit margin or gross margin
•  Return on total assets
•  Return on equity or return on owner's investment, or return on investment

Chapter 20. Valuation Metrics
•  Valuation metrics
•  General approach and set up data
•  Spreadsheet examples
•  Price to earnings ratio
•  Book value per share
•  Book value per share, common stock
•  Book value per share, preferred stock
•  Market-to-book ratio

Chapter 21. Multi Year Financial Statement Analysis
•  Multi-Year Comparisons
•  Four financial statements
•  Making multiyear comparisons
•  Spreadsheet set up and data
     – Multi year income statement
     – Multi year balance sheet
     – Multi year statement of retained earnings
     – Multi year changes in financial position
•  Multi year financial metrics and graphs
     – Liquidity Metrics: 1-10 year comparisons
     – Activity Metrics: 1-10 year comparisons
     – Leverage Metrics: 1-10 year comparisons
     – Profitability Metrics: 1-10 year comparisons
     – Valuation Metric (EPS): 1-10 year comparisons

Chapter 22. Growth Metrics
•  Growth metrics
•  General approach
•  Spreadsheet examples: growth metrics
     – Sales growth
     – Net income / profit / earnings growth
     – Earnings per share growth
     – Dividends per share growth

Chapter 23. The DuPont System
• The DuPont system of analysis: Return on investment
   (return on assets)
•  Spreadsheet example: DuPont system

Spreadsheet Programming

Chapter 24. Good practice in spreadsheet programming 
•  Good practice in spreadsheet programming
•  Take time to format
•  One file, many worksheets
•  Highlight user input and derived results
•  Proofread and check formulas
•  Prevent division by zero and other errors
•  Use intermediate results

Chapter 25. Naming cells and Ranges (Excel 2007 version only)
•  Naming cells and ranges
•  Two ways to name cells
•  Using names in formulas
•  Assigning and using range names - rows
•  Assigning and using range names - columns
•  Descriptive names for worksheets