2015

The pension asset test and taper rates

No comments

The workbook used throughout this article is available here.

The Coalition and the Greens have cut a deal to implement the Government’s proposed changes to the pension system, specifically through the “Asset Test”. After the Greens repeatedly said there was no deal. This is what makes politics interesting, apart from watching “The Killing Season” of course.
As you’ll have probably seen elsewhere, the major change is to the “taper rate,” but there are also changes to threshold levels at which the full and part pension are paid. If you want to read some neutral coverage of the deal, you can try this article from the AFR, the positive spin from the Government here, positive spin from the Greens, and Labor calling it either a dirty deal, a grubby deal or sometimes both filthy and dirty. (Political disclaimer – For the avoidance of doubt, I am not associated with any political party and seek to criticise all parties equally when the opportunity arises, such as my critique of both Labor and Liberals alike for the metadata retention regime.)

Brendan WalpoleThe pension asset test and taper rates
read more

Financial covenants series

No comments

We have just launched a series covering a number of the financial covenants that you might find in loan documents – whether a standard business/corporate loan, a leveraged financing or a project financing. As there are a lot of them (with more to come) they have been put in their own section of the blog.

So head on over to the Financial covenant series section to check it out.

Brendan WalpoleFinancial covenants series
read more

Sensitivities and Scenarios

No comments

Formulas used: Offset, If, Conditional formatting
The workbook used throughout this article is available here.

You’re using a financial model and someone asks you to run a sensitivity on x or to run a scenario. Or someone might refer to setting up some scenarios for analysis. They sound almost the same, but can be a little different in practice.
A sensitivity analysis usually involves looking at one variable in isolation and assessing how it changes your results. Scenario analysis usually involves looking at a combination of variables, and usually a number of pre-set combinations.

Brendan WalpoleSensitivities and Scenarios
read more

Dynamic Charts

No comments

Formulas discussed: Charts, Offset, Ranges
The workbook used throughout this post is available here.

Charts can be a wonderful way of presenting data to an audience – just look at the popularity of infographics. Sometimes, particularly with line graphs, you might want to change the start or end point of the graph, either so you can zoom in on a subset of the data, or to remove some dodgy-looking bits. An example of this would be where you have a model that includes an upfront construction period, with certain things not being calculated until construction completion, and the completion time might not be fixed. In this circumstance, you don’t really want to display all those blank or zero cells (see workbook example 1).
screenshot - chart 1

Brendan WalpoleDynamic Charts
read more

Net Present Value by first principles

1 comment

Formulas discussed: NPV, XNPV
The workbook used throughout this article is available here.

In a previous post we looked at how Excel calculates NPVs and IRRs and some of their weaknesses. In this post we’ll show you how you can manually calculate an NPV so that you have greater flexibility and control, and know exactly what kind of answer you’re getting.

The first part of the workbook is a refresher on how NPV and XNPV produce different results, based on their different assumptions of the start date. XNPV is useful if you are not dealing with constant, annual periods, and means you don’t have to separately calculate a discount rate for the particular period length if you start with an annual rate.
screenshot NPV annual

Brendan WalpoleNet Present Value by first principles
read more

Nothing to hide, everything to fear – why metadata retention is bad for everyone

1 comment

Australian government efforts to implement metadata retention laws are all over the news. If you read the newspapers or their websites, then you know that not even the Attorney-General seems to know what metadata will be collected, the Australian Federal Police says you have nothing to fear and they’re not interested in you, the government is only after terrorists, paedophiles and organised crime, and the data may or may not be used to see if you’re downloading movies. From the same sorts of sources, you’ll also know that the only possible problems with this regime are that journalists and whistleblowers might be more vulnerable, and that it will cost a lot of money to implement, even in this time of “budget crisis.”
Now don’t get me wrong, I can see why our law enforcement and intelligence agencies would like this bill implemented – if I can see a tool that will make my job easier, with no cost to me, I’d want it too. And yes catching terrorists and paedophiles (why does everything always come back to these two groups?) is a good thing. But just because you think spying on every citizen is a bad thing, does not mean you’re on the side of terrorists and paedophiles.

Brendan WalpoleNothing to hide, everything to fear – why metadata retention is bad for everyone
read more

The perils of data analysis – speeding fines and the road toll

1 comment

Excel formulas discussed: Slope, Correl
SPSS formulas discussed: Correlation, Regression, Oneway

I was reading an article on CarAdvice recently that argued that increased speeding fine revenue in Victoria had done nothing to reduce accidents, and that in fact speed cameras were dangerous. The argument was that while deaths had decreased, safer cars had just transferred deaths into hospitalisations; accidents were continuing at roughly the same rate but the outcomes were better. Whilst I would tend to agree with a number of the statements regarding low-level violations (particularly as I recently copped a speeding fine on a motorbike when sunglare meant I couldn’t see the speedo for a minute, and I clearly misjudged engine sound), I thought that some of the logical steps and data analysis (or lack thereof) were worth looking into.
In making the claim that speed cameras don’t reduce the road toll, the article relied on the data in this graph.
deaths,-hosp-and-fines

Brendan WalpoleThe perils of data analysis – speeding fines and the road toll
read more