Tag: excel

Financial Modelling

The steps involved in creating financial spreadsheets can be summarized as follows:

  1. Enter Historical data of 3-5 years and calculate historical ratios and observed trends for the company.
  2. List down the assumptions for the business in the coming future and its impact.
  3. Forecast the financial statements on the basis of these assumptions
  4. Calculate FCFF and FCFE and perform DCF analysis for the firm.
  5. Check for errors. Conduct sensitivity, scenario and stress testing for the model.
  6. Create charts and graphs to present the model succinctly.

For further Reference:

  1. https://corporatefinanceinstitute.com/resources/knowledge/modeling/free-financial-modeling-guide/
  2. Damodaran SpreadSheets