FINANCE GLOSSARY

Definitions of about thirty finance terms used throughout FinanceIsland's tools		 Tutorial: BASIC STATISTICS

Overview of key statistics concepts used across some of FinanceIsland's advanced analysis tools, covering among others mean, standard deviation, histograms, and probability distributions		 Tutorial: LEASE OR BUY

Companies have usually several options when acquiring capital equipment. This tutorial looks at these options and shows how to take all relevant cash flow drivers into account to arrive at the best lease-or-buy decision.		 Tutorial: MONTE CARLO SIMULATION

Introduction to Monte Carlo simulation describing how it can help reducing uncertainty in business decisions by modelling possible outcomes of metrics such as net present value (NPV) or sales forecast		 Tutorial: RISK & CAPITAL ASSET PRICING MODEL (CAPM)

How CAPM, one of the pillars of corporate finance, and FinanceIsland's risk matrix can help to compare financial investments by using project-specific discount rates
 
     
 
RECOMMENDED LEASING ARTICLES

(Don't) Look Deep Into My Lease
Some companies are enticed by low monthly payments when considering a lease. But the terms can be mesmerizing and companies get a rude awakening when leasing's real cost is revealed. CFO.com addresses some of the pitfalls.

Buy vs. Lease: What You Need to Know
When does it make more sense to buy computers? When does it make more sense to lease? Small Business Computing talked to two fast-growing small businesses, one that made the buy decision, one that decided to lease, to find out.
RECOMMENDED FINANCIAL ANALYSIS ARTICLES

Preparing Your Company for Recession
Financial crises are an inevitable part of the business cycle and companies that respond rapidly and wisely often emerge stronger. According to research from The Hackett Group, companies should look for cost-savings from long-term structural changes, seek ways to free cash from working capital, and hone their planning and forecasting capabilities. As CFO.com explains, predictive modeling and Monte Carlo simulations help companies to address the latter by identifying the key revenue and cost drivers.

How to Take Risks in a Time of Anxiety
Risk is ultimately a byproduct of uncertainty and the best weapon against uncertainty is knowledge. The knowledge required to judge wisely includes outflanking your irrational self, avoiding the flaw of averages, overcoming groupthink, and uncovering hidden weak points. Inc.com describes how the flaw of averages can be avoided by probability modeling such as Monte Carlo simulation. The article also includes the business case "The Parka Problem", which illustrates the power of Monte Carlo simulation.

Internal Rate of Return: A Cautionary Tale
For decades, finance textbooks and academics have warned that typical IRR calculations with their built-in reinvestment assumptions make bad projects look better and good ones look great. The McKinsey Quarterly (free, one-time registration required) provides a thorough analysis of this flaw and claims that the most straightforward way to avoid problems with IRR is to avoid it altogether.