Financial models of an enterprise are built to assess the prospects and optimize current or future activities. They reflect the profitability, efficiency and financial stability of the company depending on the initial parameters and changes in various business conditions.
Instructions
Step 1
Collect the raw data that are needed to build a financial model. Internal information can be formed on the basis of accounting and management accounting, a strategic development plan, as well as production factors, which include: the condition of the equipment, raw materials used, labor, etc.
Step 2
For external information, it is necessary to determine the indicators of the economic activity of the enterprise, such as the customer base, expected prices, sales volumes and other marketing information.
Step 3
Consider the macroeconomic components when building a financial model that can affect the activities of the enterprise.
Step 4
Make three forecast forms of the financial model, which are represented by profit and loss forecast, balance forecast and cash flow forecast. These stages should be calculated for the entire payback period and broken down into certain periods.
Step 5
Confirm the planned revenue calculations with market research or preliminary agreements with potential counterparties. Otherwise, your financial forecast model may not be accepted for consideration by the investor.
Step 6
Perform a cost estimate that is reasonably detailed, realistic and takes into account capital and operating costs. When calculating the long-term growth of an enterprise, it is necessary to pay attention to the sufficiency of capacity. If there are not enough of them, then do not forget to add a cost item for the expansion of production.
Step 7
Calculate the cash flow that should reflect operating, investment and financial cash flow. In other words, consider not only the receipt of funds from buyers and payment for the services of suppliers, but also the need to acquire new assets, pay dividends or increase the authorized capital.
Step 8
Form three scenarios for the financial model: optimistic, baseline, and pessimistic. To do this, it is necessary to take into account the various risks and methods of their solution.
