Day 5 - Financial Modeling from Scratch

Day 5 - Financial Modeling from Scratch

Participants start with an Excel worksheet with two years of historicals of the main case company pre-inputted. The financial statements of the case company are then analyzed, and the latest historical data is cleaned and prepared for the forecasting process. Ratios are calculated and assumptions for each line item in the financial statements are created. The full forecast model is then built. The forecasting techniques for several different items are examined separately, using dedicated Excel files, before being adapted for the case company.

Key topics:

• Identifying relevant information in the company’s financial statements, management discussion and analysis, and notes
• Adjusting historical performance for acquisitions and divestitures
• Analyzing and making reasonable projections for a company’s operating costs, non-recurring items, and other income and expense
• Creating assumptions and forecasting balance sheet accounts
• Revenues and costs
• Fixed assets - capital expenditure and depreciation
• Intangible assets
• Operating working capital
• Provisions
• Effective tax rate, taxes payable and the various deferred tax items
• Debt schedule
• Equity and share repurchases
• Building a cash flow statement from scratch
• Documentation techniques and ratio analysis
• Integrity checking