Q1. While preparing a financial model what are the assumptions we need to take.

Please list down the list of assumptions with

the values, assuming the project will be setup in India.

ANS: FinFlow Assumptions are:

1. Size in Sq. Ft 3000
2. Equity 30%
3. Debt 70%
4. Debt Service Reserve (DSR) 0.25 yrs
5. Inflation 7%
6. Tax Holiday 25 yrs
7. Tax rate 30%
8. Debt rate 10.0%
9. Moratorium 0.25 yrs
10. Debt tenure 10.0 yrs
11. Depreciation 7.0%
12. MAT 20%

Cost Assumptions are:

Rate (Rs./sq.ft)
1. Flat 2500
2. Interior Decoration 125
3. Furniture 250
4. Fixtures 10
5. Building Registration 10
6. Broker Fee 75
7. Stamp Duty 250
8. Fund Raising Fee 25
9. Tranfer of Deed Fee 50
10. Interest During Moratorium 120
11. Loan and Documentation Fee 25
12. CSR, HSE, Training 10

Revenue Assumptions are:

City Mumbai
1. Size (Sq. ft) 3,000.00
2. Occupancy (Months) 10.00
3. Rent (Rs./Month) 250,000.00
4. Deposit (Months) 4.00
5. Rent Appreciation (% p.a.) 5.00
6. Interest on Deposit (% p.a.) 8.00
Q2. Explain the function of revenue, cost and debt sheet of financial model.
ANS: Function of Revenue Sheet of Financial Model:
 Revenue is reported as positive earnings on the Income Statement.
 Revenue generally causes an increase in Net Profit After Tax (NPAT).
 Revenue is reported on the Income Statement and on the Cash Flow Statement as an operating cash inflow.

 Function of Cost Sheet of Financial Model:

 Cost mentioned in the sheet tells you about all the forecasted cost of the project to be constructed in India
 This will determine the amount of loan to be taken from the bank.
 This will help in determining various ratios
 Also will enable us to calculate the Financial Liverage
 It tells you about both – a) Long Term Cost
b) Short Term Cost
 Function of Debt Sheet of Financial Model:
 It gives you the schedule of debt payments
 It gives estimate of time period when you will end up paying the amount of loan taken
 It helps you to calculate the current financial position aswell.

Q3. Explain in detail the various steps involved (with the importance) in the fin flows sheet. Why and what the
bank need to check before financing the project.
ANS: Steps involved in FinFlow sheet:
1. All the income sources – Rent, Interest on deposits and other income are firstly recorded for 25 years as
DSR is of 25 years.
2. Then operating expenses are subtracted from revenues to calculate EBITDA, Earnings before interest, tax,
depreciation and amortization, this helps in measuring the company’s operational performance/ efficiency
3. Then Non Operational expenses are subtracted to calculate income before tax.
4. Then subtract tax to get the net income
5. For cashflow again add non operational expenses in net income as they aren’t spent anywhere.

B)
1. Credit history of the company.
2. Cash flow history and projections for the business, whether your project will have a regular
positive cashflow or not to ensure you don’t default.
3. Collateral available to secure the loan by the company.