FINANCIAL MODELING: FORECASTS & PROJECTIONS
“Today, I think a CFO needs to be more of an operating CFO: someone who’s using the financial data and the data of the company to help drive strategy, the allocation of capital, and the management of risks.” – Anthony Noto
A business plan is only as good as the numbers that support it. A good financial model tells the story of the business. It illustrates the assumptions and relationships between the variables and provides insight into the critical factors in your business’s success.
Financial Model Components
The standard components of a pro-forma financial model are: income statement (profit & loss), balance sheet, and a statement of cash flow. Our models provide the financial information on a monthly, quarterly, and yearly basis. They typically cover a three to five year time period, though the first year is typically the most scrutinized.
Costs of Goods Sold (“COGS”) are separated into fixed and variable costs.
Operating expenses are grouped by specific departments and then by general divisions: Research & Development, Sales, General, and Administrative.
Capital Expenditure (“CAPEX”) is grouped by depreciation schedules, generally three or five years.
Assumptions are document so that any reader of the financial model can understand how the numbers were derived.
Key ratios and performance indicators are important benchmarks for management to monitor as well as compare your business to competitors.
All of our models are customized to fit your needs.
Analysis & Strategy
We can help you identify and analyze potential risks, opportunities, and trends for your business and create a strategy to mitigate or capitalize on them.
Valuation & Capital Formation
Anyone will tell you the value of your business is what someone is willing to pay for it. Each investor will likely value your business differently, but having a firm understanding of the typical valuation methods is important. We can help you estimate the value of your business for investment, sale, merger, or acquisition.
Debt, equity, grants… it can be confusing. We can help you determine your capital needs and appropriate capital formation strategy for your business.
- Financial projections & analysis
- Pro-forma financials
- Capital formation strategy
- Trend analysis
- Financial risk analysis and management