Goal: To build a financial model linking Income Statement, Balance Sheet and Statement of Cashflows
Key Steps:
• Input historical data (income statement, balance sheet, statement of cashflows) – at least 3 years, but could be 5-10 years in order to see trends or cyclical behaviors
• Include Depreciation schedule
• Net Working Capital schedule
• Debt and Interest schedule
• Calculate historical ratios/metrics for the business, such as margins (% of Sales) and growth rates, etc.
• Assumptions – build out the ratios/metrics into the future years by making assumptions, based on any historical trends, changes in strategy, competitive landscape, and economic conditions
• Forecast – forecast the 3 financial statements using the Assumptions
Expectations (Must be followed):
• Layout is easy to follow and understand. Formatting is neat and organized. Outstanding use of different font colors, cell borders, charting, etc. (30 points)
• All relevant assumptions created and rationale documented with several source documents cited. 3+ years of historical data included. (30 points)
• All relevant cell formulas created and working properly, including linking supporting schedules such as Depreciation schedule or Net Working Capital schedule. Formulas used for financial projections. Pro-forma Balance Sheet is balanced. (40 points)
