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Financial Modelling

Financial modelling includes integrated forecast cashflow budgets and profit and loss budgets over a specific time period.

The cashflow and P&L forecasts include supporting schedules which contain key numerical financial and business model assumption drivers with accompanying descriptive assumption notations.

Financial models forecast the resource requirements and projected financial inflows and outflows for the execution of a business model, business plan or project plan.

Good financial models require the input of a consultant with real life experience commercializing different models across a broad range of industry and market sectors.

Great financial Models include worst, base and best-case scenario analysis and a Keep It Simple & Straightforward (KISS) interface to rabidly undertake scenario analysis.

 

Financial Models 4
Financial Models 4

8 Elements to a Good Set of Financial Forecasts

  1. Monthly cashflow forecasts, budgets or projections
  2. Monthly profit and loss (P&L) forecasts, budgets or projections
  3. Can include forecast balance sheets, usually for quarter end, half-year or end-financial-year (EOFY)
  4. Always supported by detailed income schedules as well as variable and fixed cost, capex and funding schedules with key assumption drivers and descriptive assumption notations
  5. Industry, business or project specific forecast schedules are also included. For example, an agriculture business r project might include- planting, grow out, yield and harvest schedules. A manufacturing business or project might include production schedules structured by quantity production runs or batches and include input inventories (raw materials and/or components & sub-assemblies), work in progress (WIP) inventories, and finished goods inventory. A time-based service business or project could include detailed - labor/wages with actual cost analysis, labor markup per service or expert type, billable hours vs overhead  hours utilization.
  6. Can include forecast balance sheets, usually for quarterly, six-monthly or end-financial-year (EOFY)
  7. Concise summary and overview forecast, and scenario analysis information tailored to the decision-making target audience
  8. Consistent to use of organization, business or project specific language, jargon and nomenclature

Over his career Jason Bresnehan has prepared almost 1,000 financial models for a wide range of business. Click here for Jason's experience in financial modelling.