Financial Modelling CHEAT SHEET

By Asif Masani

7 COMPONENTS OF A Business Model / Revenue Model / Revenue Streams 6. DIRECTORY / KEY /

FINANCIAL MODEL MAPPING
What is a Business Model? Why is Revenue Modelling
1. COVER PAGE The business model is the structure that describes
Important?
Makes it more look more professional and
how the company creates, delivers and captures
It helps to identify the different sources of
presentable value. It comprises the revenue model (and its
income for the company.
Customised as per your need. revenue streams)
It provides an overview of the company’s
Common things to include in your cover
○Company Name
current and future potential to earn profits.
○Logo It helps in figuring out the right pricing, and
○Model Builder Date What is a Revenue Model? assessing customer satisfaction.
○Dates
○Confidential
The revenue model is restricted to the chosen
○The company name is entered only once strategy of making money. It means making
3 Financial Statements
sure a business earns money from different
○Income Statement
sources and takes care of different types of ○Balance Sheet
customers ○Cash Flow

What is Revenue Modelling? 6. DIRECTORY / KEY /

The revenue modeling process involves MAPPING
Defining the product or service being
2. EXECUTIVE SUMMARY sold.
Determining its value and target
○ First thing to present last thing to Build customers, and
Deciding how it will generate income.
○ The first thing your boss or client wants to
know that whats the answer to this model

○ Whats does my client or boss need to know

○ What if they only had 10 mins and not 2

hours to review the model. 17 Most Common Revenue Models
1. Ad-Supported Revenue Model 11. Donation Revenue Model
2. Licensing Revenue Model 12. Arbitrage Revenue Model
3. Affiliate Revenue Model 13. Data Sales Revenue Model
4. White-Labeling 14. Transactional Revenue Model
5. Freemium Revenue Model 15. Rental Or Leasing Revenue
6. Subscription-Based Revenue Model Model
7. Consumption-Based Revenue Model 16. Borrow / Lending
8. Brokerage (Commission-Based) 17. Product Is Free, But Services
3. ASSUMPTIONS
Revenue Model Aren’t
○ Should include all the assumptions in one place
○ Next thing your Boss wants to know is How did you 9. Hidden Revenue Model 7. RAW DATA TAB
get there?
What inputs or what assumptions you made?
10. Razor And Blade Revenue Model
○ Without the assumptions tab it makes life difficult
for client
reviewer.
○ Difficult for you to update and maintain the model
12 Best Practices in Financial Modelling
7. Footnotes and Comments
1. Never re- enter same input in different places.
a.Footnotes : Written in the bottom of the model. Shows
You want your model to be dynamic.
up when model is printed
You never want to hardcode an input once and then again
2. Do not calculate more than once. Refer to original
b.Comments: For Internal Purposes OPTIONAL - INSTRUCTIONS
8. Structure your model as clearly and simply as
calculations
possible TAB
3. Avoid including numbers within formulas.
9. Usable in your absence
Exception when the number is never going to change.
10. Assumptions to be clustered together
4. Avoid unnecessary long formulas
11. Save your work Often
5. Grouping v/s Hiding Data
12. Take a Step back and look at the bigger picture.
6. Centre across selection v/s Merge Cells

4. SCENARIOS

Assumptions with more than one FORMATTING TIPS

option for inputs Formatting is not taken very seriously compared in FP&A
compared to
Better than having 3 versions of Investment banking and Private Equity as there models are
sent out
same File to clients whereas in FP&A it gets reviewed internally.

Best, Worse Base

Range estimates are better than
COLOUR CODING Unformatted models can reflect poorly on you as it shows you
do not

CONVENTIONS
pay attention to detail.
point estimates
Your model can be the best model in the world, but
Ideally 2 or 3 not more. people will not look at it because it is not formatted well.

Maintain Standard Format for numbers

(Ex: Show one decimal place make it across model.

Negative numbers are presented in brackets.

Column width and Row heights should be consistent.

Row headers should be consistent.

www.fpnaprofessionals.com Follow Asif Masani on