Financial Modelling Training from A-Lab

3. Income Statement($) Time (t)
Sales 100
Op. Expense 75
EBIT 25
Interest @8% 2.4
EBT 22.6
Tax@ 40 % 9.04
NI 13.56
Dividend 5
Retained Earning 8.56
Assets t Liabilities t
NFA 30 Debt 30
NCA 20 Equity 20
Total 50 Total 50
Assumptions:
 Sales to increase by 30%
 Margins, SCR, Interest charge,
Tax rates, Reinvestments,
Payout ratio to remain Constant
Modelling Challenge:
 Project Financials for t+1 period
 Predict the External Fund
needed to support the increased
sales level.

4. Income Statement t+1
Sales 130.00
OPEX 97.50
EBIT 32.50
Interest 2.68
EBT 29.82
Tax 11.93
NI 17.89
Dividend 6.60
Retained Earning 11.29
Assets t+1 Liabilities t+1
NFA 39 Debt 33.5506
NCA 26 Equity 31.2931
Total 65 Total 65

5.  To learn the nuts & bolts of the Model
 Build a simple Integrated Model in Excel
 Validate the Assumptions
 Conduct Sensitivity test
 Create Financial report

6.  To generate thousands of scenarios and build
Distribution for Financial Metrics, Compute its Expected
Value and Standard error of the estimate.
Answer the following questions:
 What is the probability of earning, say a million dollar
next year?
 What is probability of making a loss, next year ?
 What is the confidence interval for predictions ?
 What is the probability, that the firm would default on its
debt obligations?

7.  Using Financial Model Outputs
 Firm’s EquityValue
 EnterpriseValue
 IntangiblesValue
 LiquidationValue

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