Financial Modelling helps to forecast a business’ financial performance into the future based on historical data and assumptions.
At Anup N. Amatya & Associates, professional Financial Consultants and Business & Management Consultants, we help our clients to develop appropriate Financial Models to forecast future outcomes with alternate business strategies.
Hierarchy of Financial Modelling
- Three Statement Model– Income Statement, Balance Sheet, Cash Flow Statement
- DCF Analysis– Discounted cash flow analysis to value a business
- Scenario Analysis– Estimate changes in the value of a business in different possible scenarios
- Sensitivity Analysis– Evaluate how sensitive investment is to changes in drivers
- M&A Analysis– Evaluate the attractiveness of potential merger, acquisition or divestiture
- Capital Raising– Analyze the pro forma impact of raising debt or equity
- LBO Analysis– Determine how much leverage can be used to purchase a company
Good models unmistakably separate inputs, processing, and outputs
- Unambiguously identified
- Should only ever be entered once
- Processing should be transparent
- Broken down into simple steps & Easy to follow
- Quickly accessible
Financial Modelling – Inputs
- Reasonable data ranges
- Easy to use
- Easy to understand
- Easy to update data
- Enter each data once
- Use colour to different inputs and outputs
- Use data validation & conditional formatting & use comments
Financial Modelling – Processing
- Easy to maintain
- Accurate processing
- Break down complex calculations
- Use comments and annotations
- Use formatting & Calculate final figures for the output reports
Financial Modelling – Outputs
- Provide key results to aid decision-making
- Easy to understand
- Make outputs modular
- Consider creating a summary section with only the most important, key model outputs
Financial forecasting framework (for Three Statement
- Assumptions & drivers – Historical ratios and figures which drive the forecast
- Income statement – Summarizes the company’s profit and loss
- Balance sheet – Displays the company’s assets, liabilities and shareholders’ equity
- Cash flow statement – Reports the cash generated and spent by a company
- Supporting schedules –Breaks down longer calculations such as PP&E & debt schedule
- Three Statement Financial Model!
- DCF Analysis Illustration!
- eCommerce Startup Financial Model!
- Mergers & Acquisitions Financial Model!
For more details, Contact Us, or follow the links below.
Founder & Senior Consultant: Anup Narsingh Amatya