Assignment #2

FINANACIL MODEL
Dfinition: Financial modeling is a representation in numbers of a company's
operations in the past, present, and the forecasted future. Such models are
intended to be used as decision-making tools. Company executives might use
them to estimate the costs and project the profits of a proposed new project.

How do you make a financial model for a project?

1. Start with a Cash Flow Template for One Project. ...
2. Forecast Direct Cost and Revenues in Project Finance. ...
3. Calculate Project's Operating Expenditures. ...
4. Calculate Capital Expenditure in Your Financial Model. ...
5. Add Debt to your Project Finance Model. ...
6. Build a Consolidated Project Finance Cash Flow Statement.

What do you mean by financial model?

Financial modeling is the task of building an abstract representation (a model) of a real
world financial situation. This is a mathematical model designed to represent (a
simplified version of) the performance of a financial asset or portfolio of a business,
project, or any other investment.

Examples of financial models

 Three-Statement Model. The three-statement model is the most basic setup for financial
modeling. ...
 Discounted Cash Flow (DCF) Model. ...
 Merger Model (M&A) ...
 Initial Public Offering (IPO) Model. ...
 Leveraged Buyout (LBO) Model. ...
 Sum of the Parts Model. ...
 Consolidation Model. ...
 Budget Model.

What are the 4 major components of financial modeling?

 Here we have the four major components of a financial model: the income statement,
balance sheet, cash flow statement, and a debt schedule to keep track of debt
repayments or borrowings if cash is needed.

What are the three financial models?

The purpose of a 3-statement model (i.e. an integrated financial statement model) is to

forecast or project the financial position of a company as a whole. It contains the three
types of financial statements – balance sheet, income, and cash flow statement –
which are linked together.

What is financial model and its advantages?

Financial models make it possible to ascertain the exact amount of free cash flow
that will accrue to the firm at different points in time. This helps companies to know
their exact worth when they are selling out their stakes to third party investors such as
investment bankers and private equity funds

What makes a good financial model?

A good financial model is one that is easy and efficient to use, review and
understand, and one that creates insights and outputs that are relevant to the
company

A good financial plan contains seven key components:

 Budgeting and taxes.
 Managing liquidity, or ready access to cash.
 Financing large purchases.
 Managing your risk.
 Investing your money.
 Planning for retirement and the transfer of your wealth.
 Communication and record keeping.

Is financial Modelling difficult?

It is difficult to understand the nature of relationships between various financial variables
which finally culminate in the financial statements. However, financial modeling is
considered to be one of the most complex tasks, even in the financial field.

What are the Financial Modeling Tools?

 #1 – Microsoft Excel.
 #2 – Excel Knowledge.
 #3 – Knowledge of Finance.
 #4 – Knowledge of Accounting.
 #5 – Knowledge about Economy.
 #6 – Mindset.
 #7 – Presentation Skills.
 #8 – Colour Formatting Knowledge

Financial Modeling Examples

 Three-Statement Financial Model. ...
 M&A Model. ...
 Forecasting Models. ...
 DCF Model. ...
 CCA Model. ...
 Asset and Liability Management (ALM) ...
 Sum-of-the-parts Model. ...
 Capital Budgeting Model