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Are you confused about
Financial Modeling
Concepts?
Here is a small presentation on
Top 12 Financial Modeling
Concept Checkers!!!
• Hard-coded valuesBlue
• CalculationBlack
• LinkingGreen
Ratios
Often more informative as they show trend.
Puts numbers in perspective with other numbers
Helps control for different sizes of firms
Relationships between values in the financial statements
2. Ratio Analysis
Solvency Ratios
Operating Efficiency
Ratios
Risk Analysis
Analysts practice these ratios to determine the
firm’s ability to pay its short-term liabilities.
Examines how management uses its assets to
generate sales and it considers the relationship
between various asset categories and sales.
Risk analysis examines the uncertainty of income
for the firm and for an investor.
3.Important Ratios
4. BASE Rule
BASE rule is an acronym for Beginning, Additions, Subtractions, Ending.
Beginning + Additions – Subtractions = Closing Balance
B: Beginning
Add: A: Additions
Less: S:Subtractions
Closing E: Ending
B: Beginning
Add: A: Additions
Less: S:Subtractions
Closing E: Ending
FY 07 FY 08
5. Sustainable Growth Rate
It measures how a firm can grow, without
having additional equity and funds.
Sustainable Growth Rate (SGR) = Retention Rate * Return On Equity
(RR) (ROE)
6. Financial Projections and Analysis
 In Forecasting, the important things are assumptions which are also
called as Drivers.
 In Financial Modeling we have to create different independent
Schedules like Revenue Buildup Schedule, Depreciation Schedule,
Shareholders Equity Schedule, Debt Schedule.
 Through creation of different schedules we get, easy access to
projected information which is required for linking in other places.
 Based on Key Ratios, benchmarking of projections can be done.
So forecasting of financial
statements is done by preparing:
7. Revenue Buildup Schedule
8. Cost Sheet
9. Working Capital Schedule
10.Depreciation Schedule
11.Amortization Schedule
12.Shareholder’s Equity Schedule
& Debt Schedule
Knowledge is like a line
with no ends…
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modeling/top-12-financial-modeling-concept-
checkers/
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Top 12 financial modeling concept checkers

  • 1. Are you confused about Financial Modeling Concepts?
  • 2. Here is a small presentation on Top 12 Financial Modeling Concept Checkers!!!
  • 3. • Hard-coded valuesBlue • CalculationBlack • LinkingGreen
  • 4. Ratios Often more informative as they show trend. Puts numbers in perspective with other numbers Helps control for different sizes of firms Relationships between values in the financial statements 2. Ratio Analysis
  • 5. Solvency Ratios Operating Efficiency Ratios Risk Analysis Analysts practice these ratios to determine the firm’s ability to pay its short-term liabilities. Examines how management uses its assets to generate sales and it considers the relationship between various asset categories and sales. Risk analysis examines the uncertainty of income for the firm and for an investor. 3.Important Ratios
  • 6. 4. BASE Rule BASE rule is an acronym for Beginning, Additions, Subtractions, Ending. Beginning + Additions – Subtractions = Closing Balance B: Beginning Add: A: Additions Less: S:Subtractions Closing E: Ending B: Beginning Add: A: Additions Less: S:Subtractions Closing E: Ending FY 07 FY 08
  • 7. 5. Sustainable Growth Rate It measures how a firm can grow, without having additional equity and funds. Sustainable Growth Rate (SGR) = Retention Rate * Return On Equity (RR) (ROE)
  • 8. 6. Financial Projections and Analysis  In Forecasting, the important things are assumptions which are also called as Drivers.  In Financial Modeling we have to create different independent Schedules like Revenue Buildup Schedule, Depreciation Schedule, Shareholders Equity Schedule, Debt Schedule.  Through creation of different schedules we get, easy access to projected information which is required for linking in other places.  Based on Key Ratios, benchmarking of projections can be done.
  • 9. So forecasting of financial statements is done by preparing: 7. Revenue Buildup Schedule 8. Cost Sheet 9. Working Capital Schedule 10.Depreciation Schedule 11.Amortization Schedule 12.Shareholder’s Equity Schedule & Debt Schedule
  • 10. Knowledge is like a line with no ends… To know in detail about this article click on the link below: http://www.educorporatebridge.com/financial- modeling/top-12-financial-modeling-concept- checkers/
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