Financial Model

Create a
Financial Model
Training & Excel Templates
By Former Deloitte
Management
Consultants
2 www.slidebooks.com 2
Objectives of this document
Learn how to create a Financial Model with a
Powerpoint training and Excel template created
by former Deloitte Management Consultants
Save your time by using our fully editable
PowerPoint slides and Excel sheets
Table of content
How to build an Excel Financial Model?
What are the key formulas to use in your Financial Model?
3
4
What is Financial Modeling?
1
How to plan and design an Excel Financial Model?
2
Click here to download the editable PowerPoint
version at www.slidebooks.com
Financial modeling definition
Financial modeling is the task of building an abstract representation
of a real world financial situation
This abstract representation is called a financial model
A financial model is designed to represent a simplified version of the
performance of a financial asset, a project, or any other investment
A financial model is generally build around financial statements
such as the income statement, the balance sheet and the cash flow
statement
The most commonly tool used to build a financial model is Excel
Definition
Table of content
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Ensure that your are clear about your goal
Switch off your computer
Define the question your financial model needs to answer
Identify the blank slides in your storyline that will have to be
completed by your financial model outputs sheet(s)
Identify what will not be solved by your model
Create and agree on a work plan
Do a back of the envelope calculation to give you an idea of the
final answer
Draw out a driver tree
Company Value
Creation
Increase net
operating
profit less
adjusted
Taxes (NOPLAT)
Improve
capital
allocation
Capital
deployment
Decrease
operating
expenses
Increase
gross profit
Cost of
capital
Decrease
manufacturing
costs
Increase
revenues
Reduce
distribution
costs
Reduce
selling
costs
Reduce
R&D costs
Reduce
administrative
costs
Improve product mix
Increase price
Decrease staffing
Reduce cost of inputs
Lower support functions costs
N/A
Reduce inventories
Optimize scheduling
Improve plant utilization
Lower Customer Service costs
Decrease staffing
Improve process
Increase volume
Optimize physical network
Increase productivity
Use alternative distribution
Increase Accounts payable
Improve capital investment
Reduce Accounts receivable
Example
Identify what should be inputs, calculations and outputs
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Inputs Calculations Outputs
Draw out a schematic for how the spreadsheet will work
Inputs sheet #1
Inputs sheet
Calculation sheet #1
Calculation sheets
Outputs sheet #1
Outputs sheet
Calculation sheet #2
Table of content
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Financial model structure
An effective Excel financial model should have the following structure:
1.Project
Description sheet
4.Inputs
sheet(s)
3.Calcula-
tion sheet(s)
4.Outputs
sheet(s)
+
-
X -.
.
i
2.Worksheet
Description
3.Worksheet
Flow
1.The Project description sheet should include:
The project name
The name of the scenario
A brief description of the project
The model version
The file name
The name of the persons who prepared and reviewed the model
The names of project sponsor and the project leader
1.Project description sheet Excel template
Project X
Version 1
Project Description
Scenario X
Project Name:
Project X
Porject Category
Category X
Business Unit: Business Unit X
Model Version: Version 1
Date prepared: 03-Jan-14
Mr Smith
Manager
Business Unit X
Michael Cant
Executive Manager
Business Unit X
Project Leader: Mr Smith
Manager
Business Unit X
Model Prepared By:
Project Sponsor:
Project Description
Insert a brief description of the project
Project Details
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editable
Excel
spreadsheet
2.The Worksheet description should include:
The Financial model purpose
A worksheet overview with the name, the type and the description of each sheet
If required, some guidance on how works each sheet
The colour codes and formatting conventions used in the financial model
i
2.Worksheet description Excel template
i
Project X
Version 1
Worksheet Description
Scenario X
Sheet Name Sheet Type
Assumptions Input
Sheet X Calulations
Sheet Y Output
User Input cells 3,000,000 $
Formula amounts 3,000,000 $
Cells which you want to draw attention to 3,000,000 $
Conditional formatting showing Active Scenario
Currency 4,000 $
Negative currency (300,000) $
FTE figures (1dp) 1.5
Worksheet Overview
Financial Model Purpose
Exemple: To calculate the project X expenditure, net benefit and NPV
Color Codes
Formatting Conventions
Description
Input your financial model assumptions for
up to 5 scenarios. Select the active
Double click
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editable
Excel
spreadsheet
3.The Worksheet Flow should include:
A visual representation of the inputs sheet, calculations sheet(s) and outputs sheet(s)
The relationship between each sheet of the document
Links towards each sheet of the document in order to facilitate the navigation
3.Worksheet Flow Excel template
Project X
Version 1
Worksheet Flow
Scenario X
Assumptions
Inputs sheet
Project Resources
Cost
Calculation sheets
Financial Summary
Outputs sheet
Project P&L
Project Capex
Double click
to access the
editable
Excel
spreadsheet
4.The Inputs sheet should include:
Your company standard assumptions:

Assumptions that are used to assess all the projects of the company
Your static assumptions:

Assumptions specific to your project and constant over the whole modeling period (e.g. tax rate)
Your dynamic assumptions:

Assumptions specific to your project and changing over the whole modeling period (e.g. growth rate)
The source and updated date of all assumptions
The possibility to select your scenario
4.Inputs sheet Excel template
Project X
Version 1
Assumptions
Scenario X
Scenarios
Input Active Scenario Number 4 1 2 3 4 5
Active Scenario Name Scenario X Base Worst Best Scenario X Scenario Y
Base Scenario Flag 1 1
General Company Assumptions Base Worst Best Scenario X Scenario Y
Company Tax Rate 30% 30% x x x x
Cost of Capital 11% 11% 8% x x x
Discount Rate 11% 11% 10% x x x
CPI (Wage) 3% 3% x x x x
CPI (non wage) 3% 3% x x x x
Insert assumption x x x x x x
Project Static Assumptions Base Worst Best Scenario X Scenario Y
Project Start Date 1-Jan-14 1-Jan-14 x x x x
Inflation Start Date 16-Jan-14 16-Jan-14 x x x x
Benefit Ramp Up Start Date 16-Jan-14 16-Jan-14 x x x x
Benefit Ramp Up Duration (Months) 6 6 x x x x
Gross Profit Margin per product 40% 30% 40% 40% 40% 40%
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editable
Excel
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5.The Calculation sheet(s) should include information such as:
The calculation of the revenue generated by the project
The calculation of the cost savings generated by the project
The calculation of the project operational expenditure (OPEX)
+
-
X -.
.
The calculation of the project capital expenditure (CAPEX)
5.Calculation sheet Excel template:
+
-
X -.
.
Project X
Version 1
Project P&L
Scenario X
FY1 FY2 FY3 FY4 FY5 Total
Volume: Number of products sold
Product A 10,000 20,000 30,000 50,000 100,000 210,000
Product B 50 100 200 500 1,000 1,850
Product C 10 20 30 50 100 210
Price: Average Price per product
Product A 1,000 $ 1,050 $ 1,050 $ 1,050 $ 1,050 $ 5,200 $
Product B 100 $ 100 $ 105 $ 105 $ 105 $ 515 $
Product C 10,000 $ 10,500 $ 10,500 $ 10,500 $ 10,500 $ 52,000 $
Revenue: Product multiply by Price
Product A Revenue 10,000,000 $ 21,000,000 $ 31,500,000 $ 52,500,000 $ 105,000,000 $ 220,000,000 $
Product B Revenue 5,000 $ 10,000 $ 21,000 $ 52,500 $ 105,000 $ 193,500 $
Product C Revenue 100,000 $ 210,000 $ 315,000 $ 525,000 $ 1,050,000 $ 2,200,000 $
Total Revenue 10,105,000 $ 21,220,000 $ 31,836,000 $ 53,077,500 $ 106,155,000 $ 222,393,500 $
Double click
to access the
editable
Excel
spreadsheet
6.The Outputs sheet(s) should include information such as:
Total add revenue and cost savings
Total add operational expenditure
Taxes and net income
Change in WC, capital expenditures, operating free cash flow
Present value, cumulative present value and net present value
IRR, payback period, payback period discounted

6.Outputs sheet template
Project X
Version 1
Financial Summary
Scenario X
Economic Value Added (EVA)
Revenue 10,105,000 $ 21,220,000 $ 31,836,000 $ 53,077,500 $ 106,155,000 $ 222,393,500 $
Cost of Goods sold 6,063,000 $ 12,732,000 $ 19,101,600 $ 31,846,500 $ 63,693,000 $ 133,436,100 $
Operating Expenses 783,000 $ 940,955 $ 1,107,630 $ 1,136,486 $ 1,028,202 $ 4,996,273 $
Capitalized Expenditure 60,000 $ 60,000 $ 60,000 $ 60,000 $ 60,000 $ 300,000 $
Net Benefit 3,199,000 $ 7,487,045 $ 11,566,770 $ 20,034,514 $ 41,373,798 $ 83,661,127 $
Average Net Book Value 80,000 $ 140,000 $ 120,000 $ 100,000 $ 80,000 $
Cost of Capital 11% 11% 11% 11% 11%
Capital Charges 8,800 $ 15,400 $ 13,200 $ 11,000 $ 8,800 $ 57,200 $
Economic Value Added (EVA) 3,190,200 $ 7,471,645 $ 11,553,570 $ 20,023,514 $ 41,364,998 $ 83,603,927 $
Net Present Value of EVAs $99,822,374.94
$-
$10,000,000
$20,000,000
$30,000,000
$40,000,000
$50,000,000
$60,000,000
$70,000,000
$80,000,000
$90,000,000
Economic Value Added
Double click
to access the
editable
Excel
spreadsheet
Table of content
What are the key formulas to use in your Financial
Model?
3
4
1
2
A Financial Model essentially uses the following 12 formulas
MATCH INDEX
MATCH AND
INDEX
COMBINED
SUMPRODUCT
TRIM
LOWER
UPPER
PROPER
LEFT
RIGHT
MID
&
ROUND
ROUNDUP
ROUNDOWN
IF SUMIF INDIRECT ADDRESS
TRIM
The TRIM function removes all spaces between words and numbers except
for single spaces
It is used to clean up data and ensure consistency
Description
=TRIM(text) Syntax
Example
LOWER / UPPER / PROPER
These text functions change the capitalisation of text to either all lower case,
all capitals, or first letter upper case and all other letters lower case
Description
=UPPER(Text)
=LOWER(Text)
=PROPER(Text)
Syntax
Example
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comprehensive and editable
PowerPoint and Excel version
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Financial Model

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Financial Model

Hochgeladen von

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Create a

Your company standard assumptions:

Your static assumptions:

Your dynamic assumptions:

Change in WC, capital expenditures, operating free cash flow

Present value, cumulative present value and net present value

IRR, payback period, payback period discounted

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