Co-working Space Financial Model presents the case of an investment in the creation of a co-working space and its subsequent operation. The model generates three financial statements, a summary page, a valuation, along various feasibility metrics as well as graphs. The financing options for the project include a standard long-term loan, as well as an overdraft facility, and of course equity funding from investors.
So a quick overview of the model, in the contents tab you can see the structure of the model and by clicking on any of the headlines to be redirected to the relevant worksheet.
On the manual tab, you are able to feed the general information for the model such as: project name & title, responsible, timeline of the model, and the date and currency conventions.
Additionally, there is a description of the color-coding of the model in the same tab. Inputs are always depicted with a yellow fill and blue letters, call up (that is direct links from other cells) are filled in light blue with blue letters while calculations are depicted with white fill and black characters.
There is also color coding for the various tabs of the model. Yellow tabs are mostly assumptions tabs, grey tabs are calculations tabs, blue tabs are outputs tabs (that is effectively results or graphs) and finally, light blue tabs are admin tabs (for example: the cover page, contents, and checks).
Moving on to the Inputs, in this tab, the user needs to adjust the business drivers in the yellow cells. The drivers consist of the total leased area, the occupancy rate, and the pricing of each space. The costs to support the drivers of the business are split into direct and indirect expenses. Other drivers include receivables days, payable days, inventory days, and income tax. Additional assumptions include: depreciation period in years (for both the initial investment and subsequent capital expenditures), debt gearing, interest on loans (term loan, overdraft), and share capital.
Calculations: This is where all calculations are performed. The revenues are calculated based on the previous inputs and the growth rates and by deducting the operating costs, the operating profit is resulting. Based on the assets financed and the gearing of the financing the interest and depreciation are occurring. By using the working capital assumptions the impact of the business cycle is presented. Finally depending on the existing debt financing and forecast assumptions the loan balances are calculated (Term loan, overdraft).
In the Outputs tab: everything is aggregated here into the relevant statements: profit and loss, balance sheet, and cash flow on a yearly basis.
In the summary tab, you are able to see a high-level report with the main financial & business ratios. It can be readily printed on one page for your convenience.
Moving to the Valuation tab, a free cash flow to the firm valuation is performed leading to an enterprise value. There is also a calculation of the Net Present Value from both a project and an equity perspective, as well as an Internal Rate of Return, Profitability Index, Cash on Cash ratio, Payback, and Discounted Payback Period. Additionally, a sensitivity analysis is performed on the equity value of the business by using the discount rate and the growth rate to perpetuity as sensitivity parameters.
In the Graphs tab: Various graphs present the business metrics, revenues, operating expenses, profitability, in addition to financials from the income statement, balance sheet and cash flow, valuation as well as a series of feasibility metrics.
Checks: A dedicated worksheet that makes sure that everything is working as it should!
Important Notice: Yellow indicates inputs and assumptions that the user is able to change, blue cells are used for called up cells, and white cells with black characters indicate calculation cells.