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USC MARSHALL
IBEAR MBA Speaker Series
OVERVIEW OF FINANCIAL MODELING
By: Yan Pronin
Why financial modeling?
• Can give instantaneous answers to different
combinations of variables
• Allows modification of multiple assumptions
Skills needed
• Excel 2002
• Excel 2010
• Excel 2013
• Excel 2015
• Exc…. you get the idea
Levels of expertise
1. Basic: (data entry, basic formulas)
2. Intermediate: (+ integration of various
sources vlookup, hlookup, multilevel logic,
basic macros, conditional summation,
conditional formatting)
3. Advanced: (+ {array formulas}, solver,
sensitivity analysis, integration of complex
extremely large multivariate models)
4. Guru: (advanced VBA programming +)
Types of Financial models
• Operating Model
• Cash Flow model
Types of questions financial modeling can answer:
- NPV
- IRR
- ROI
- Money on Money
- Years to break even
- Optimal ramp up period/growth rate
- Discount rate to breakeven
- Number of customers to satisfy
required rate of return
- Revenue/customer
- Cannibalization ratios
- Market Penetration scenarios
General structure:
Assumptions:
Inputs: Blue
Calculations in Black
Projections:
Capital outlay $’000, Year 1 Year 2 Year 3 Year 4 Year 5 Year 6
Revenues
Costs
Profit/Loss
Outputs:
NPV
IRR
Value Creation x (EBITDA X, Money on Money)
Sensitivity tables
Example
3. Excel shortcuts: (if circled – most useful)
LET’S DO SOME MODELING!
3. Sensitivity Analysis
LET’S DO SOME MODELING!
QUESTIONS?

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Overview of Financial modeling

  • 1. USC MARSHALL IBEAR MBA Speaker Series OVERVIEW OF FINANCIAL MODELING By: Yan Pronin
  • 2. Why financial modeling? • Can give instantaneous answers to different combinations of variables • Allows modification of multiple assumptions
  • 3. Skills needed • Excel 2002 • Excel 2010 • Excel 2013 • Excel 2015 • Exc…. you get the idea
  • 4. Levels of expertise 1. Basic: (data entry, basic formulas) 2. Intermediate: (+ integration of various sources vlookup, hlookup, multilevel logic, basic macros, conditional summation, conditional formatting) 3. Advanced: (+ {array formulas}, solver, sensitivity analysis, integration of complex extremely large multivariate models) 4. Guru: (advanced VBA programming +)
  • 5. Types of Financial models • Operating Model • Cash Flow model Types of questions financial modeling can answer: - NPV - IRR - ROI - Money on Money - Years to break even - Optimal ramp up period/growth rate - Discount rate to breakeven - Number of customers to satisfy required rate of return - Revenue/customer - Cannibalization ratios - Market Penetration scenarios
  • 6. General structure: Assumptions: Inputs: Blue Calculations in Black Projections: Capital outlay $’000, Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Revenues Costs Profit/Loss Outputs: NPV IRR Value Creation x (EBITDA X, Money on Money) Sensitivity tables
  • 8. 3. Excel shortcuts: (if circled – most useful)
  • 9. LET’S DO SOME MODELING!
  • 10.
  • 11. 3. Sensitivity Analysis LET’S DO SOME MODELING!