Assignment On Financial Models
Added on - 30 Sep 2019
2Course TopicsFinancial modelingOverviewFinancial modeling has become the course of advanced finance, excels skills and comprehensiveknowledge used to understand financial models. This course is different from other course as it isknown as university course. Financial modeling is recognizedThe aim of following courseIntroductionA financial model used to build excels to estimate business performance in finance in future. Theestimation is simply leads to companies past performance, presumptions about future andrequirement in preparation of income statement, cash flow statement and balance sheet and threestatement models. From thesis, latest models of various types can be made such as discountedcash flow analysis, leveraged buyout, mergers and acquisitions and sensitive analysis. Financialmodel output is used to make decisions and financial analysis performance, both inside andoutside of company. Company inside executives will consider financial model in decisionmaking:1.Capital raising in debt or in equity form2.Acquisition of business assets
3Course Topics3.Business growing organically included new stores opening, entering into new marketsegment.4.Estimation of future and budgeting.5.Value relevance in business6.Allocation of capital prioritizing projects.Objectives of financial modelingThe main objective of financial model is the success of foreign investment made by investors.Financial modeling helps the corporate management in decision making and also financialanalysis preparation:1.Valuing a business2.Capital raising3.Business growth4.Acquisition making5.Selling assets and divesting business units6.Allocation of capital7.Forecasting and budgetingWhat characteristics have sound financial model?The good financial model implies:Understandability: The transparencies of designs used are easy to understand.
4Course TopicsReliability: Control checks used to error free excel so that errorEasy to use: Instead of too much struggling to make simple results from bad model using thefinancial model one can produce the analysis.Key issues: The key issues focused on financial model are not to waste much time in immaterialitems development.How to build financial modelsHistorical results and assumption:The first step of financial model building is withdrawing the previous income statements of firm.The statements are designed in excel format to cover the information of financial statement. Theforecasted decisionBalance sheet:Through income statement balance sheet can make. Calculation covered the account receivableand payable and accounting should be done according to them.Supporting schedulesDebts schedule and interest schedules are prepared in this step. The debt schedule releases thepast recorded data and increases debts and deducts the payment done. Interest is calculated onthe remaining balance.