Overview of Financial modeling
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USC MARSHALL IBEAR MBA Speaker SeriesOVERVIEW OF FINANCIAL MODELING
By: Yan Pronin
Why financial modeling?
Can give instantaneous answers to different combinations of variablesAllows modification of multiple assumptions
Skills neededExcel 2002Excel 2010Excel 2013Excel 2015Exc. you get the idea
Levels of expertise
Basic: (data entry, basic formulas)
Intermediate: (+ integration of various sources vlookup, hlookup, multilevel logic, basic macros, conditional summation, conditional formatting)
Advanced: (+ {array formulas}, solver, sensitivity analysis, integration of complex extremely large multivariate models)
Guru: (advanced VBA programming +)
Types of Financial models
Operating ModelCash Flow model
Types of questions financial modeling can answer:NPVIRRROIMoney on MoneyYears to break evenOptimal ramp up period/growth rateDiscount rate to breakevenNumber of customers to satisfy required rate of returnRevenue/customerCannibalization ratiosMarket Penetration scenarios
General structure:Assumptions:
Inputs: BlueCalculations in BlackProjections: Capital outlay $000, Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Revenues Costs
Profit/LossOutputs:
NPVIRRValue Creation x (EBITDA X, Money on Money)Sensitivity tables
Example
3. Excel shortcuts: (if circled most useful)
LETS DO SOME MODELING!
3. Sensitivity AnalysisLETS DO SOME MODELING!
QUESTIONS?