Financial modeling glossary

Clear definitions of the terms used across our models and guides.

revenue y1: Total Year-1 revenue — automatically computed as the SUM of all active revenue streams.
wacc: Weighted Average Cost of Capital — discount rate used in the DCF. Higher WACC = lower valuation. Either entered directly or built up from CAPM cost of equity and after-tax cost of debt.
risk free: Risk-free rate (Rf) — yield on a long-dated government bond. The base of the CAPM cost of equity.
beta: Beta (β) — sensitivity of the equity to overall market moves. β=1 moves with the market; >1 is more volatile.
erp: Equity Risk Premium — extra return investors demand for holding equities over the risk-free rate. CAPM: Ke = Rf + β·ERP.
terminal growth: Perpetual growth beyond the projection (Gordon Growth Model). Must be < WACC.
ev ebitda multiple: EV/EBITDA exit multiple used as a valuation cross-check.
capex: Capital Expenditure — long-term assets, depreciated over useful life rather than expensed.
depreciation: Allocation of an asset's cost over its useful life. Linked to the depreciation start period.
working capital days: Days of revenue tied up in working capital. Higher = more cash-flow drag.
reg number: Company registration / incorporation number (e.g., NTN, CRN, CIN, EIN).
model period: Annual, Quarterly or Monthly output. Quarterly/monthly expand each year into 4 or 12 linked columns; the annual growth rate is converted geometrically ((1+annual)^(1/4)−1 or ^(1/12)−1) so the periods compound back to exactly your stated annual rate.
projection years: How many years the model forecasts — 3, 5, 7, 10, 15, 20 or 25. Free downloads cover 3-year models; 5–25 years is a per-model-download premium.
tax rate: Corporate income tax rate applied to taxable profit. Auto-fills from your selected country and stays editable; the Tax sheet also applies loss carryforward (NOL) so losses shelter future taxable profit.
starting ftes: Number of full-time-equivalent employees in Year 1, before headcount growth.
fte growth: Annual % increase in full-time-equivalent headcount, compounding each year off the starting FTEs.
avg salary: Average fully-loaded annual salary per FTE, before salary inflation.
salary inflation: Annual % increase applied to average salaries each year.
debt tenor: Loan tenor — the number of years over which the debt principal is repaid. Drives the scheduled repayment in the Debt sheet.
grace period: Months before principal repayment begins. During grace, interest may accrue but principal is not yet amortised.
dividend pct: Share of positive net income paid out as dividends each period. The remainder is retained and flows to retained earnings and cash.
receivable days: Receivable Days (DSO) — average days customers take to pay. Accounts Receivable = revenue × DSO ÷ 365. Higher DSO ties up more cash.
inventory days: Inventory Days (DIO) — average days stock/work-in-progress is held before sale. Inventory = COGS × DIO ÷ 365. Set 0 for service businesses.
payable days: Payable Days (DPO) — average days you take to pay suppliers. Accounts Payable = operating costs × DPO ÷ 365. Higher DPO frees up cash.
revenue formula: Revenue combines two annual drivers. Effective Annual Growth = (1 + Ann. Growth %) x (1 + Annual Infl %) - 1. Example: 10% growth and 10% inflation produce 21.0% effective annual growth.
revenue units: Units x Price model. Example: 10,000 units x $50 price = $500,000 revenue. Next periods update units by the unit growth rate and price by the price inflation rate. Quarterly and monthly models convert the annual rate geometrically — quarterly = (1 + annual)^(1/4) − 1, monthly = (1 + annual)^(1/12) − 1 — so the compounded periods reproduce exactly the stated annual rate.
pct cost: Percent-of-revenue cost. Example: Revenue $1,250,000 x COGS 20% = $250,000. With optional 10% excess cost uplift: $250,000 x 1.10 = $275,000. The uplift is applied once to the current revenue-based cost, not raised to a year power.
fixed cost: Fixed monthly cost. Example: $10,000 per month x 12 months = $120,000 annual cost. Annual inflation compounds for fixed costs: Year 2 at 10% = $132,000.
payroll cost: Payroll by role. Example: 3 employees x $5,000 average monthly salary x 12 months = $180,000 annual payroll before any annual raise.
quarterly rate: For quarterly models, the displayed Quarterly Effective Growth is the Effective Annual Growth divided by 4. This is the model's quarterly growth-driver convention.