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by Tim Berry, President, Palo Alto Software, Inc.
1: Introduction ..........................................................................................................6Planning with Computers ....................................................................................7Planning vs. Accounting ......................................................................................82: Getting Help .........................................................................................................9Context-Sensitive Help Facility ...........................................................................9Instructions and Examples ...................................................................................9The Table Help Tab ..............................................................................................9Figure 1: Table Help Tab............................................................................10The Table Manager for Linking Logic ...............................................................11Figure 2: Table Manager............................................................................113: Modular, Linked Tables .....................................................................................12Modular Financial Analysis ...............................................................................12Figure 3: Modular, Linked, Tables.............................................................12Working with Linked Tables ..............................................................................13Figure 4: Working with Linked Tables......................................................13Developing Your Own Links .............................................................................144: Simplifying Assumptions ...................................................................................15The Government Doesn’t Pay for Losses ..........................................................15The Simplifying Assumption .........................................................................15The Important Exception to the Rule .............................................................15Figure 5: Negative Taxes...........................................................................16Figure 6: Tax Toggle in Cash Details.........................................................16The Recommended Solution ..........................................................................16Figure 7: Zero Tax Rate for Loss Periods..................................................17Depreciation as a Single Row of Simple Input ..................................................18Interest Rates as Simple Mathematics ...............................................................19
VAT, GST, and Sales Tax ...................................................................................19Figure 8: Dealing with VAT, GST, or Sales Tax........................................21Figure 9: Linking VAT to Cash Flow.........................................................225: Tables, One by One ............................................................................................23General Assumptions .........................................................................................23Figure 10: General Assumptions................................................................23Why is Collection Days Black? .....................................................................23Estimators vs. Ratios ......................................................................................23Break-even Analysis ..........................................................................................24Figure 11: Break-even Analysis.................................................................25Background and Details .................................................................................25Average per-unit sales price (per-unit revenue): .......................................25Average per-unit cost: ...............................................................................26Monthly fixed costs: .................................................................................26Getting Your Assumptions from Your Other Tables ......................................26Average per-unit sales price (per-unit revenue): ........................................26Average Variable Cost ................................................................................27Average fixed costs ....................................................................................28Market Analysis .................................................................................................29Figure 12: Market Analysis........................................................................29The Use of CAGR Formula in the Final Column ..........................................29The ROUND Function ...................................................................................29Unprotected Formulas in Columns D through G. .........................................30Figure 13: Straight Line vs. Estimated Market Growth.............................30Figure 14: The Market Contrast.................................................................31 No Fewer Than Two Rows ............................................................................31Problems Deleting Rows ................................................................................31Sales Forecast .....................................................................................................31Switching Between Two Sales Forecasts .......................................................31Problems Deleting Rows ................................................................................32The Average Price Calculation .......................................................................32Figure 15: No Sales, No Price....................................................................32Figure 16: Average Price, Second Case.....................................................33
What Exactly is Cost of Sales? ......................................................................33Handling Direct Labor as Cost of Sales .........................................................34Programming a Growth Rate in Column B ....................................................34Figure 17: Working with a Growth Rate Variable in Sales........................34Programming a Straight Cost of Sales Percentage ........................................34Figure 18: Constant Cost Percentage Formula..........................................35Linking to Sales from User-Defined Tables ...................................................35Figure 19: Linking Tables in Sales Forecast.............................................36Dealing with Subscriptions (Churn Rate) ......................................................36Figure 20: Subscription Sales (Churn).......................................................37Hiding Unused Rows with Zero Values .....................................................37Figure 21: Subscription (Churn) Model Years Formulas...........................38Personnel Plan ....................................................................................................39Figure 22: Personnel in Cost of Sales........................................................40Headcount is Simple Data Input ....................................................................41Formula for Sales Commission in Personnel .................................................41Figure 23: Setting Commissions for Personnel.........................................41Deleting Rows in Personnel ...........................................................................41Profit and Loss ...................................................................................................42Links from Other Tables ................................................................................42Make an Expense a Percent of Sales ..............................................................42Figure 24: Expense as Percent of Sales.....................................................43Problems Deleting Rows ................................................................................43Interest Expenses ...........................................................................................43Taxes ..............................................................................................................44Start-up ..............................................................................................................44Main Information Items .................................................................................44The Only Distinction on Start-up is Timing ..................................................45Defining Assets ..............................................................................................46Expenses vs. Assets .......................................................................................46Start-up Requirements are Assets and Expenses ..........................................47Figure 25: Start-up Expenses and Assets...................................................48What is “Left to Finance?” ...........................................................................48
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