Practical guides, how-tos and comparisons to get the most out of our free online tools.
CCC = DIO + DSO − DPO. It is the number of days your cash is out of your hands, and it is the reason a profitable, growing business runs out of money. Worked end to end, with the negative-cycle case that makes suppliers your cheapest lender.
Camille Laurent · 10 min read
EOQ = √(2DS/H) balances ordering cost against holding cost. Its most useful property is how flat the cost curve is around the optimum — and its four failure modes are quantity discounts, lumpy demand, a finite replenishment rate, and the two inputs nobody can measure.
Camille Laurent · 11 min read
WACC = E/V × Re + D/V × Rd × (1 − T). The tax shield makes debt genuinely cheaper, and the cost of equity comes from CAPM — whose beta and equity risk premium are estimates that move the answer by whole percentage points, and the valuation by a quarter.
Camille Laurent · 12 min read
The quick ratio removes inventory because inventory is the current asset that may not convert. Two companies with an identical current ratio can be five times apart on the quick ratio — and both measures are still blind to the one thing that actually stops a company paying: timing.
Camille Laurent · 11 min read
EBITDA adds back the two costs that differ most between companies, which is exactly what makes it comparable — and exactly why it flatters anyone who owns a lot of equipment. Here is the same profit walked all the way down, and the maintenance-capex floor the measure never shows.
Camille Laurent · 11 min read
Margin is measured on the selling price, markup on the cost. They describe the same profit from opposite ends, they are never equal, and reading one as the other quietly removes a large slice of your gross profit.
Camille Laurent · 12 min read