Focus on the structure of Finance Model Message by Trainer Inside

Financial Modelling and Valuation Course Content: Live Class

Hello everyone and welcome to this video in this video let’s uh quickly cross check the fourth quarter data that we calculated is actually the right data or not so what we have to do we have to go to the annual report of 2020 this is the annual report so uh control f and here you have to type quarterly enter just check uh this particular table gives you

The quarterly data this particular section so this is net sales these are the net sales of first three quarters and this sales we have calculated so this is actually what we want to cross check so come here so march 3 4 1 2 3 4 1 2 june 3 4 6 5 3 4 6 5 three four two nine three four two nine three four six four this is what we want to cross check that what we

Calculated is right or wrong so three four six four is the right data so if you want to cross check with the previous quarters also you can do it on your own so i just wanted you to know that what we calculated is right and there is nothing wrong in that now in the next video onwards we will understand how to actually forecast income statement balance sheet and

Cash flow statement to forecast any item that you want to forecast that will include four steps what are the four step the first step is to collect the historical data right then the second step will be to do the historical analysis now based on historical analysis management guidelines research reports or your knowledge about the company based on these various

Parameters you have to take certain assumptions okay based on the assumptions you have to forecast the items okay so as of now what i have done i have collected only the historical income statement so my first step is done now what is the second step we have to decide the projection criteria and accordingly we have to do the historical analysis we will do the

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Historical analysis of each item of income statement and balance sheet and cash flow statement but we will do it by one by one item okay we will first understand the projection criteria for sales then cogs then sdna then taxes interest dividend and we will proceed with the each line of income statement each line of balance sheet and each line of cash flow statement

So historical data we have to collect we have to do the historical analysis we have to take assumptions based on historical analysis based on management guidelines based on the research reports based on industry publications or based on your knowledge about the company based on your objective why you are preparing the financial model so based on various parameters

You have to take assumptions now assumptions are different for each analyst okay when the assumptions will differ from analyst to analyst and from time to time this quarter when you are preparing the financial model the assumption will be different when next time you will prepare the financial model the assumption for the same company will be different because

Your knowledge will be different the data that you have in your excel will be different your objective may be different so based on so many things the amount of assumption will be different my recommendation to you is that do not think too much about the amount of assumption try to understand the structure of the financial model try to understand how do you work

With excel try to understand how financial statements are connected with each other okay try to understand how schedules are created do not think too much about just the amount of assumption why we have taken this much percentage of dividend why we have taken this much percentage of capital expenditure why we have taken this much of account receivable this much

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Of this thing no don’t think too much about it just go with the flow that i’m teaching don’t get stuck somewhere okay simply follow the procedure with each item watch one video and practice in your excel file okay don’t think that why we have taken this much of cogs only we could to take some another amount of assumptions also we can definitely take but

First focus on completion of the financial model once you understand how the financial model is prepared then we have to spend time on fixing the amount of assumption also okay we want to reach to a certain profit profit is not achieved in excel then what we have to do we have to go back and change the assumption we want to decide how much uh capacity will be

Required how much funds will be required so what we have to do for that we will come back and change the assumption so assumption are something that we will be changing when the model is completed okay so when you are preparing the model don’t focus too much about about the amount of assumptions just finish the model with whatever assumption i will be taking in

This model once the model is completed sma spend time as much as you want do analysis as much as you want do research as much as you want and fix the assumption okay it will take several years for you to be able to take the assumptions for a company initially no one is going to ask you to settle the assumptions they will give you the references which you have

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To read and take the assumptions from there okay so go with the videos follow the procedure understand the model once you complete this model you will definitely have a lot of confidence okay what is happening these days with many of my students who i am sending to different companies for recruitment for interviews they are being asked to prepare a separate

Project they will give you the project which you have to complete in two or three days and then come back for face to face round off interview so if you know how to prepare the financial model then you can prepare the financial model of any game company what i’m saying if you understand how models are created if you prepare all the models in my online course which

I am teaching or in my life classes which i am teaching if you prepare all the models then you can prepare the models of any given company in the world definitely you will need little more additional knowledge about the business of the company but you will not be left right you will not be blank you will be able to start the model with little efforts you will be

Able to complete the model and if the day is yours you will be selected in the investment banking profile okay i think this is what i wanted to share with you in this video now let us understand how do we do the historical analysis and start understanding how do we prepare for casting of income statement balance sheet and cash flow statement in the next video

Onwards thank you very much thanks for watching

Transcribed from video
Focus on the structure of Finance Model Message by Trainer Inside By IB Institute Financial Modelling courses