In this two-part article series, we will discuss how to calculate a firm’s cost of capital. This is an important measurement with several business applications. We’ll go over the basic concepts below - the second part will focus on the practical applications.

Financial management is a risky business - predictions of future performance are prone to the effects of an ever-changing economic environment. Discounting predicted cash flows is one method a financial manager can use to account for the risks associated with forecasting performance.

Have you ever wondered if increasing revenues provides more value to shareholders of a company than decreasing costs (i.e., margin improvements)? In this article we look at a ratio called Relative Value of Growth that can help answer this question.

Do you normally just look at the net income of a company? Do you analyze the company's cash flows from operations? See how the two are connected in this article discussing the quality of income.

Learn about operating leverage and how one can compare operating leverage across companies.

Learn about debt covenants and their classification (positive and negative, capital and performance). Understand actions when debt covenants are violated, including financial reporting implications. Review an example of debt covenants involving interest coverage ratio and fixed charge coverage ratio.

Learn how to analyze accounts receivable and allowance for doubtful accounts like financial analysts do. Includes formulas and examples of financial analysis of accounts receivable.

Learn about residual income and how to calculate it using income from operations, earnings before interest and taxes (EBIT), net operating profit after tax (NOPAT), or net income.

Explanation of payback period, discounted payback period, cutoff period, and payback reciprocal method with accounting examples.

Learn about the relationship between effective annual interest rate and compound interest.