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Financial Modeling
Financial Modeling
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Financial model

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Learn how to do a Financial Model with editable Powerpoint slides and Excel Templates created by former Deloitte Management Consultants.

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Financial model

  1. 1. Create a Financial Model Training & Excel Templates By Former Deloitte Management Consultants
  2. 2. 2 www.slidebooks.com2 Objectives of this document “ Learn how to create a Financial Model with a Powerpoint training and Excel template created by former Deloitte Management Consultants ” “ Save your time by using our fully editable PowerPoint slides and Excel sheets ”
  3. 3. 3 www.slidebooks.com3 Table of content How to build an Excel Financial Model? What are the key formulas to use in your Financial Model? 3 4 What is Financial Modeling?1 How to plan and design an Excel Financial Model?2 Click here to download the editable PowerPoint version at www.slidebooks.com
  4. 4. 4 www.slidebooks.com4 Financial modeling definition • Financial modeling is the task of building an abstract representation of a real world financial situation • This abstract representation is called a financial model • A financial model is designed to represent a simplified version of the performance of a financial asset, a project, or any other investment • A financial model is generally build around financial statements such as the income statement, the balance sheet and the cash flow statement • The most commonly tool used to build a financial model is Excel Definition
  5. 5. 5 www.slidebooks.com5 Table of content How to build an Excel Financial Model? What are the key formulas to use in your Financial Model? 3 4 What is Financial Modeling?1 How to plan and design an Excel Financial Model?2
  6. 6. 6 www.slidebooks.com6 Ensure that your are clear about your goal  Switch off your computer  Define the question your financial model needs to answer  Identify the blank slides in your storyline that will have to be completed by your financial model outputs sheet(s)  Identify what will not be solved by your model  Create and agree on a work plan  Do a back of the envelope calculation to give you an idea of the final answer Click here to download the editable PowerPoint version at www.slidebooks.com
  7. 7. 7 www.slidebooks.com7 Draw out a driver tree Company Value Creation Increase net operating profit less adjusted Taxes (NOPLAT) Improve capital allocation Capital deployment Decrease operating expenses Increase gross profit Cost of capital Decrease manufacturing costs Increase revenues Reduce distribution costs Reduce selling costs Reduce R&D costs Reduce administrative costs Improve product mix Increase price Decrease staffing Reduce cost of inputs Lower support functions costs N/A Reduce inventories Optimize scheduling Improve plant utilization Lower Customer Service costs Decrease staffing Improve process Increase volume Optimize physical network Increase productivity Use alternative distribution Increase Accounts payable Improve capital investment Reduce Accounts receivable Example
  8. 8. 8 www.slidebooks.com8 Identify what should be inputs, calculations and outputs Insert your text Your text Your text Your text Your text Your text Your text Your text Your text Your text Your text Your text Your text Your text Your text Your text Your text Your text Your text Your text Your text Your text Your text InputsCalculationsOutputs
  9. 9. 9 www.slidebooks.com9 Draw out a schematic for how the spreadsheet will work Inputs sheet #1 Inputs sheet Calculation sheet #1 Calculation sheets Outputs sheet #1 Outputs sheet Calculation sheet #2
  10. 10. 10 www.slidebooks.com10 Table of content How to build an Excel Financial Model? What are the key formulas to use in your Financial Model? 3 4 What is Financial Modeling?1 How to plan and design an Excel Financial Model?2
  11. 11. 11 www.slidebooks.com11 Financial model structure An effective Excel financial model should have the following structure: 1.Project Description sheet 4.Inputs sheet(s) 3.Calcula- tion sheet(s) 4.Outputs sheet(s) + - X -..i 2.Worksheet Description 3.Worksheet Flow Click here to download the editable PowerPoint version at www.slidebooks.com
  12. 12. 12 www.slidebooks.com12 1.The Project description sheet should include:  The project name  The name of the scenario  A brief description of the project  The model version  The file name  The name of the persons who prepared and reviewed the model  The names of project sponsor and the project leader
  13. 13. 13 www.slidebooks.com13 1.Project description sheet Excel template Project X Version 1 Project Description Scenario X Project Name: Project X Porject Category Category X Business Unit: Business Unit X Model Version: Version 1 Date prepared: 03-Jan-14 Mr Smith Manager Business Unit X Michael Cant Executive Manager Business Unit X Project Leader: Mr Smith Manager Business Unit X Model Prepared By: Project Sponsor: Project Description Insert a brief description of the project Project Details Double click to access the editable Excel spreadsheet
  14. 14. 14 www.slidebooks.com14 2.The Worksheet description should include:  The Financial model purpose  A worksheet overview with the name, the type and the description of each sheet  If required, some guidance on how works each sheet  The colour codes and formatting conventions used in the financial model i
  15. 15. 15 www.slidebooks.com15 2.Worksheet description Excel template i Project X Version 1 Worksheet Description Scenario X Sheet Name Sheet Type Assumptions Input Sheet X Calulations Sheet Y Output User Input cells 3,000,000$ Formula amounts 3,000,000$ Cells which you want to draw attention to 3,000,000$ Conditional formatting showing Active Scenario Currency 4,000$ Negative currency (300,000)$ FTE figures (1dp) 1.5 Worksheet Overview Financial Model Purpose Exemple: To calculate the project X expenditure, net benefit and NPV Color Codes Formatting Conventions Description Input your financial model assumptions for up to 5 scenarios. Select the active Double click to access the editable Excel spreadsheet Click here to download the editable PowerPoint version at www.slidebooks.com
  16. 16. 16 www.slidebooks.com16 3.The Worksheet Flow should include:  A visual representation of the inputs sheet, calculations sheet(s) and outputs sheet(s)  The relationship between each sheet of the document  Links towards each sheet of the document in order to facilitate the navigation
  17. 17. 17 www.slidebooks.com17 3.Worksheet Flow Excel template Project X Version 1 Worksheet Flow Scenario X Assumptions Inputs sheet Project Resources Cost Calculation sheets Financial Summary Outputs sheet Project P&L Project Capex Double click to access the editable Excel spreadsheet
  18. 18. 18 www.slidebooks.com18 4.The Inputs sheet should include:  Your company standard assumptions: Assumptions that are used to assess all the projects of the company  Your static assumptions: Assumptions specific to your project and constant over the whole modeling period (e.g. tax rate)  Your dynamic assumptions: Assumptions specific to your project and changing over the whole modeling period (e.g. growth rate)  The source and updated date of all assumptions  The possibility to select your scenario Click here to download the editable PowerPoint version at www.slidebooks.com
  19. 19. 19 www.slidebooks.com19 4.Inputs sheet Excel template Project X Version 1 Assumptions Scenario X Scenarios Input Active Scenario Number 4 1 2 3 4 5 Active Scenario Name Scenario X Base Worst Best Scenario X Scenario Y Base Scenario Flag 1 1 General Company Assumptions Base Worst Best Scenario X Scenario Y Company Tax Rate 30% 30% x x x x Cost of Capital 11% 11% 8% x x x Discount Rate 11% 11% 10% x x x CPI (Wage) 3% 3% x x x x CPI (non wage) 3% 3% x x x x Insert assumption x x x x x x Insert assumption x x x x x x Insert assumption x x x x x x Project Static Assumptions Base Worst Best Scenario X Scenario Y Project Start Date 1-Jan-14 1-Jan-14 x x x x Inflation Start Date 16-Jan-14 16-Jan-14 x x x x Benefit Ramp Up Start Date 16-Jan-14 16-Jan-14 x x x x Benefit Ramp Up Duration (Months) 6 6 x x x x Gross Profit Margin per product 40% 30% 40% 40% 40% 40% Insert assumption x x x x x x Double click to access the editable Excel spreadsheet
  20. 20. 20 www.slidebooks.com20 5.The Calculation sheet(s) should include information such as:  The calculation of the revenue generated by the project  The calculation of the cost savings generated by the project  The calculation of the project operational expenditure (OPEX) + - X -..  The calculation of the project capital expenditure (CAPEX)
  21. 21. 21 www.slidebooks.com21 5.Calculation sheet Excel template: + - X -.. Project X Version 1 Project P&L Scenario X FY1 FY2 FY3 FY4 FY5 Total Volume: Number of products sold Product A 10,000 20,000 30,000 50,000 100,000 210,000 Product B 50 100 200 500 1,000 1,850 Product C 10 20 30 50 100 210 Price: Average Price per product Product A 1,000$ 1,050$ 1,050$ 1,050$ 1,050$ 5,200$ Product B 100$ 100$ 105$ 105$ 105$ 515$ Product C 10,000$ 10,500$ 10,500$ 10,500$ 10,500$ 52,000$ Revenue: Product multiply by Price Product A Revenue 10,000,000$ 21,000,000$ 31,500,000$ 52,500,000$ 105,000,000$ 220,000,000$ Product B Revenue 5,000$ 10,000$ 21,000$ 52,500$ 105,000$ 193,500$ Product C Revenue 100,000$ 210,000$ 315,000$ 525,000$ 1,050,000$ 2,200,000$ Total Revenue 10,105,000$ 21,220,000$ 31,836,000$ 53,077,500$ 106,155,000$ 222,393,500$ Double click to access the editable Excel spreadsheet Click here to download the editable PowerPoint version at www.slidebooks.com
  22. 22. 22 www.slidebooks.com22 6.The Outputs sheet(s) should include information such as:  Total add revenue and cost savings  Total add operational expenditure  Taxes and net income  Change in WC, capital expenditures, operating free cash flow  Present value, cumulative present value and net present value  IRR, payback period, payback period discounted
  23. 23. 23 www.slidebooks.com23 6.Outputs sheet template Project X Version 1 Financial Summary Scenario X FY1 FY2 FY3 FY4 FY5 Total Economic Value Added (EVA) Revenue 10,105,000$ 21,220,000$ 31,836,000$ 53,077,500$ 106,155,000$ 222,393,500$ Cost of Goods sold 6,063,000$ 12,732,000$ 19,101,600$ 31,846,500$ 63,693,000$ 133,436,100$ Operating Expenses 783,000$ 940,955$ 1,107,630$ 1,136,486$ 1,028,202$ 4,996,273$ Capitalized Expenditure 60,000$ 60,000$ 60,000$ 60,000$ 60,000$ 300,000$ Net Benefit 3,199,000$ 7,487,045$ 11,566,770$ 20,034,514$ 41,373,798$ 83,661,127$ Average Net Book Value 80,000$ 140,000$ 120,000$ 100,000$ 80,000$ Cost of Capital 11% 11% 11% 11% 11% Capital Charges 8,800$ 15,400$ 13,200$ 11,000$ 8,800$ 57,200$ FY1 FY2 FY3 FY4 FY5 Total Economic Value Added (EVA) 3,190,200$ 7,471,645$ 11,553,570$ 20,023,514$ 41,364,998$ 83,603,927$ Net Present Value of EVAs $99,822,374.94 $- $10,000,000 $20,000,000 $30,000,000 $40,000,000 $50,000,000 $60,000,000 $70,000,000 $80,000,000 $90,000,000 FY1 FY2 FY3 FY4 FY5 Total Economic Value Added Double click to access the editable Excel spreadsheet
  24. 24. 24 www.slidebooks.com24 Table of content How to build an Excel Financial Model? What are the key formulas to use in your Financial Model? 3 4 What is Financial Modeling?1 How to plan and design an Excel Financial Model?2
  25. 25. 25 www.slidebooks.com25 A Financial Model essentially uses the following 12 formulas MATCH INDEX MATCH AND INDEX COMBINED SUMPRODUCT TRIM LOWER UPPER PROPER LEFT RIGHT MID & ROUND ROUNDUP ROUNDOWN IF SUMIF INDIRECT ADDRESS Click here to download the editable PowerPoint version at www.slidebooks.com
  26. 26. 26 www.slidebooks.com26 TRIM • The TRIM function removes all spaces between words and numbers except for single spaces • It is used to clean up data and ensure consistency Description • =TRIM(text)Syntax Example
  27. 27. 27 www.slidebooks.com27 LOWER / UPPER / PROPER • These text functions change the capitalisation of text to either all lower case, all capitals, or first letter upper case and all other letters lower case Description • =UPPER(Text) • =LOWER(Text) • =PROPER(Text) Syntax Example Click here to download the editable PowerPoint version at www.slidebooks.com
  28. 28. 28 www.slidebooks.com28 Click here to download the comprehensive and editable PowerPoint and Excel version at www.slidebooks.com …

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