PowerPoint Presentation

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?