Financial modelling projections

  1. Financial Modelling
    1. Financial Modelling Introduction
    2. Financial Modelling Tools & steps
    3. How to Make a Financial Model and choose the best Company and Excel Workbook Setup?
    4. How to build a financial model Step-by-Step Guide to Excel Sheet Setup?
    5. Financial Statements: A Step-by-Step Guide to Extracting Historical Data
    6. Financial modelling excel
    7. Learn financial modelling Balance Sheets, P&L, and Assumptions Know About
    8. What is financial modelling Assumptions and Projections?
    9. Financial modelling and valuation
    10. Investment decision calculation
    11. The balance sheet’s asset side reveals the company’s line items.
    12. Revenue Model & Growth Rate in in P&L Assumptions
    13. Basics of financial modelling CAPEX and Asset Schedule
    14. Financial Analysis: Gross Block and CAPEX
    15. Gross block & Capex: Constructing the Asset Schedule
    16. Depreciation : Connecting P&L and Balance Sheet for Accurate Asset Forecasting
    17. depreciation expense : Exploring Different Methods in Financial Modeling
    18. Debt Management: Connecting P&L and Balance Sheet for Accurate Liability Projection
    19. Interest Rate Calculation & Debt Schedule
    20. Share Capital & Reserves
    21. IPOs and Under subscription : Bata’s Share Capital Dynamics
    22. Reserves & Surplus understanding Bata schedule
    23. Reserves and surplus schedule How to Build on Excel
    24. Financial modelling projections
    25. Balance Sheet Projections and Completing Reserves Schedule
    26. Cash Flow Statements Analysing Operations, Investments, and Financing Activities
    27. What Is Valuation for Investor
    28. Free Cash Flow Key Components, Formulas and How to Calculate?
    29. FCFF and FCFE uses in Mastering Free Cash Flow Calculation
    30. WACC Weighted Average Cost of Capital Analysis
    31. Market Risk Premium analysis
    32. Tax Shield and its Impact on Equity Holder Returns
    33. Weighted Average Cost of Capital and Terminal Growth in Valuation
    34. Terminal Value Understanding Perpetual Cash Flow Projections in DCF Model
    35. Learn Financial Modelling
    36. Free Cash Flow to the Firm (FCFF) Calculation with examples
    37. Stock Valuation DCF Model & Stock Market Value
Marketopedia / Financial Modelling / Financial modelling projections

A Step-by-Step Guide for P&L and Balance Sheet

When constructing a financial model, two critical milestones must be reached. In this chapter, we will meet the first one while the second milestone will be accomplished in the next.

Prior to our continued progression, I’d like to remind you of all the methods we’ve used in our economic modelling process. Should you have difficulty with any particular topic, it may be prudent to examine the pertinent chapter and read through it once more. If you have any questions, don’t hesitate to inquire.

We began the module by formatting an excel workbook into a layout suited for financial modelling. After indexing the columns and locking them in place, we made certain each column corresponded to the same year throughout the model, thus preserving its accuracy.

We thoroughly studied the annual report to confirm the accuracy of the statements; we then transferred the Profit and Loss and Balance Sheet figures from the past five years onto a prearranged excel sheet. The only numerical information entered by hand into the financial model were those two, while all remaining numbers were either estimated or derived.

We introduced an assumption sheet that included P&L and Balance Sheet assumptions. These assumptions were either based on growth rate or determined as a larger line item percentage.

Once the assumption sheet is in place, it’s time to construct the revenue model. This model will provide an insightful, detailed look at all of the factors that affect revenue.

In our model, ‘schedules’ were used as a concept. This notion essentially functions as an assumption, but dissecting it into its components allows us to gain more profound understanding.

This follows the principle that the closing balance of one year is the opening balance for the next.

We have been able to use the assumptions and timetables to forecast a balance sheet and profit & loss statement.

As you can see, the figures are interconnected from one sheet to the next, creating a cohesive system.

In this chapter, we will generate a five-year P&L and Balance sheet as part of our financial modelling expedition. It’s an important step forward.

–  P&L Projection

We’ve reached an exhilarating point in our financial modelling trek. A financial modelling lover likened it to a wedding kitchen scene.

At a wedding kitchen, it is not uncommon to have someone chopping vegetables, someone grinding the masala, another frying items, and yet another mashing them. Eventually everything comes together in on

e pot for the final recipe.

Up to this point in our financial model, we’ve been dealing with individual components. Now it’s time for us to join everything together and integrate the model.

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