02 Intro to 3-Statement Modeling
What is a financial model?
A tool built in a spreadsheet to forecast financial performance to make business decisions.
key structure for model building
1. Inputs (data & assumptions)
2. Calculations (processing & helper calculations)
3. Outputs (graphs & charts)
auditing techniques
1. sanity checks
2. go to
3. row differences
4. trace precedents/dependents
5. view formulas
6. error checking
financial forecasting framework
1. drivers & assumptions
2. income statement
3. balance sheet
4. cash flow statement
5. supporting schedules
6. outputs
financial forecasting approach (i.e. workflow)
1. historical data
2. assumptions & drivers
3. forecast revenue down to EBITDA
4. forecast working capital
5. forecast capital assets
6. forcast capital structure
7. complete statements
synonym for PPE
capital assets