PURPOSE OF MODEL
Highly versatile and user-friendly Excel model for the preparation of a rolling 3 statement (Income Statement, Balance Sheet and Cash flow Statement) financial projection for a new or existing business providing services (e.g. car servicing/repair, tailoring, hairdressing, beauty treatments, health/cosmetic clinics etc)
The model also incorporates a discounted cash flow valuation calculation using the projected cash flows. The model follows best practice financial modelling principles and includes instructions, line item explanations, checks and input validations.
The key outputs include:
– Projected full financial statements (Income Statement, Balance Sheet and Cash flow Statement) for any of the 3 scenarios, presented on a quarterly basis across up to 5 years and summarised on an annual basis.
– Dashboard with:
o Summarised projected Income Statement and Balance Sheet
o Compounded Annual Growth rate (CAGR) for each summarised income statement and Balance Sheet line item
o List of key ratios including Average revenue growth, Average profit margins, Average return on assets and equity and Average Debt to Equity ratio.
o Bar charts summarising income statement and Balance Sheet projections
o Revenue by Service and Product Category in table, pie chart and bar-chart format
– Discounted cash flow valuation using the projected cash flow output.
Inputs are split into Income Statement and Balance Sheet Inputs. Most inputs include user-friendly line item explanations and input validations to help users understand what the input is for and populate correctly.
– Name of business;
– First projection year and quarter;
– Naming for service categories, product categories, variable costs, staff costs, other expenses and fixed assets;
– Sales tax applicability for revenue streams, variable costs, other expenses and fixed assets.
– Opening balance sheet (for existing businesses);
– Income Statement actuals (for trend analysis);
– Service Revenue inputs including new customers, retention and churn ratios, sales mix by service category, price per service category and credit terms offered (if applicable);
– Product Revenue inputs including number of purchases per customer, sales mix by product category, average price per product category and credit terms offered (if applicable);
– Cost of Goods sold including cost per product category, safety stock and average credit terms received;
– Other costs inputs including other variable costs, staff costs, marketing costs and fixed costs;
– Sales and corporate tax inputs including rate and payment periods;
– Dividend inputs including amount (percentage of retained earnings) and frequency;
– Fixed Assets including addition amounts and useful life;
– Borrowings including addition amounts and interest rate;
– Share Capital additions;
– Discount rate inputs (for valuation calculation).
The model comprises of 9 tabs split into input (‘i_’), calculation (‘c_’), output (‘o_’) and system tabs. The tabs to be populated by the user are the input tabs (‘i_Setup’, ‘i_Actuals’ and ‘i_Assumptions’). The calculation tab uses the user-defined inputs to calculate and produce the projection outputs which are presented in ‘o_Fin Stats’, ‘o_Charts’ and ‘o_DCF’.
System tabs include:
– A ‘Front Sheet’ containing a disclaimer, instructions and contents;
– A Checks dashboard containing a summary of checks by tab.
Other key features of this model include the following:
– The model follows best practice financial modelling guidelines and includes instructions, line item explanations, checks and input validations;
– The model contains a dynamic timeline that allows for a mix of Actual and Forecast period across a 5-year period allowing projections to be rolled forward with minimal effort;
– The model has been reviewed using specialised model audit software to ensure consistency of formulas and significantly reduce risk of errors;
– Timeline is split on a monthly basis and summarised on an annual basis;
– The model allows the user to model 5 separate product categories;
– Costs are split into: variable and other costs for better driver-based forecasting;
– The model allows for the following number of underlying categories for each line item (these can be easily expanded if required):
o Service Categories – 8 categories;
o Product Categories – 5 categories;
o Cost of Goods Sold – 5 categories (1 for each Product Category);
o Other Variable costs – 3 categories;
o Staff costs – 5 categories;
o Marketing costs – 3 categories;
o Other expenses – 10 categories;
o Fixed assets – 3 categories.
– Apart from projecting revenue and costs the tool includes the possibility to model receivables and payables, fixed assets, borrowings, dividends, corporate tax and sales tax;
– Business Name, currency, starting projection period are fully customisable;
– Revenue, Cost and Fixed Asset descriptions are fully customisable;
– The model included an integrated discounted cash flow valuation using the projected cash flow outputs;
– The model includes instructions, line item explanations, checks and input validations to help ensure input fields are populated accurately;
– The model includes a checks dashboard which summarises all the checks included in the various tabs making it easier to identify any errors.
If you require any be-spoke modifications to the tool, we are more than happy to assist with this. Please contact us on: [email protected]