Financial

Excel

The NPV formula in Excel is counterintuitive at first. When I first used it, I made a simple mistake by selecting all the cash flow, including the initial investment. I learned that Excel requires you to select only the future flows and then discount the initial investment from the result, to get the accurate NPV value.

Dollars

The financial resources of an organization are the set of liquid assets:
- Cash.
- Short term bank deposits.
- Liquid financial investments, like stocks and bonds.

Financial resources are used to carry out the main operations of the business, like buying goods and services, and to carry out long term investments.

financial
  • Cash: money or its equivalent.
  • Bank Deposits: money placed into banks, including checking accounts and money market accounts.
  • Holdings of Stocks: publicly traded stocks can be easily converted to cash, and are considerer financial resources of an organization. This stocks are traded on stocks exchanges, like the NASDAQ or the NYSE. It takes only a few minutes to sell stocks on the market.

Capital budgeting is a process that assess the convenience of carrying out an investment or not. If there are many profitable investments available, the capital budgeting tries to find out which one is more advisable.

This article teaches you how to calculate the IRR (Internal Return Rate) using Excel. The Excel function to calculate the IRR is “IRR” and it’s really simple, since it only takes the range that contains the flow of funds, including the initial investment.

What is an Investment Project

An investment project is a detailed proposal of an expenditure of liquid resources, with the objective of taking actions that will lead to future profits.

- An investment project is made before the investment itself.

- An investment implies an expenditure of resources, but it doesn’t necessarily means that those resources are our own resources: a lot of investments are carried out by borrowing money.

This article teaches you how to calculate the NPV (Net Present Value) using Excel. The Excel function to calculate the NPV is “NPV”.

The cash flow statement shows the inflows and outflows of cash generated and used by an organization in a given period of time.

Planning

Financial planning is a process that evaluates the situation of a business in relation to it’s financial resources and needs and determines how to manage the liquid assets, taking the future inflows and outflows of funds into accounts.

The capital market is a set of institutions through which the supply and demand of long and mid term means of financing, like stocks and mid- and long-term debt, meet.

Through the monetary market, unlike the capital market, short term assets are bought and sold. Together, the capital markets and the monetary market form the financial market.

Examples of assets traded in the capital market:
- Stocks.
- Long term government bonds.
- Long term corporate bonds.

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