• Understanding the basic functionality and relationships between financial statements
• Explanation of the supporting accounting transactions
• Building assumptions and generalizations about the layout of the models
• Review of basic-to-advanced Excel functions used in integrated statement modeling
• Introduction to the building process of the integrated statement model

📄 Introduction to 3-Statement Financial Modeling and Integrated Business Modeling

📄 3-Statement Financial Modeling (Corporate Finance vs. Investment Banking)

📄 Context is Key: Understanding Business/Client Objectives

📄 Understanding the Dynamics of the Business and its Industry

📄 🎯 INTRODUCTION TO THE BUSINESS CASE

📄 Modeling Skills Inventory: The Skills you Need and Those You Don’t

• Understanding the basic functionality and relationships between financial statements
• Explanation of the supporting accounting transactions
• Building assumptions and generalizations about the layout of the models
• Review of basic-to-advanced Excel functions used in integrated statement modeling
• Introduction to the building process of the integrated statement model

📄 Introduction to 3-Statement Financial Modeling and Integrated Business Modeling

📄 3-Statement Financial Modeling (Corporate Finance vs. Investment Banking)

📄 Context is Key: Understanding Business/Client Objectives

📄 Understanding the Dynamics of the Business and its Industry

📄 🎯 INTRODUCTION TO THE BUSINESS CASE

📄 Modeling Skills Inventory: The Skills you Need and Those You Don’t

• Organizing the model, document requests, and data received
• Developing the overall model structure and crafting supporting schedules
• Following commonly-recognized best practices for ease of use and collaboration
• Horizontal vs. vertical arrangements

📄 Designing and Developing the Model at the Outset of the Project

📄 Model Formats and Layouts: Vertical Structure vs. Horizontal Structure

📄 Model Hygiene and Common Font Color Schemes

📄 Other Modeling Best Practices to Consider

📄 Error Check Schedules and Conducting Quality Reviews

• Importing historical information
• Building baseline forecasts with roll-forwards and streamlined assumptions
• Forecasting assumptions and key drivers for major line items
• Developing the revenue and expense forecast with top-down and bottoms-up approaches
• Analyze fixed vs. variable vs. mixed costs in the build-up of the expense budget
• Building balance sheet roll-forwards for key accounts (receivables, payables, inventory, fixed assets, debt, equity)

📄 Overview of the Financial Statements

📄 The Income Statement

📄 The Balance Sheet

📄 The Statement of Cash Flows – Indirect

📄 The Statement of Cash Flows – Direct

📄 Understanding the Key Connection Across the Financial Statements

📄 Accrual vs. Cash Impact

📄 Identifying Risks and Uncertainty Inherent in the Business and Model

📄 Overview of the Integrated Financial Statement Modeling Process

• Understanding the drivers of revenue, pricing, and volume
• Building the revenue forecast
• Profiling drivers of costs and the material, labor, and OH forecasts
• Forecasting general overheads (SG&A)

📄 Overview of the Income Statement | Profit & Loss

📄 Review of the Historical Financials and What They Mean for the Forecast Model

📄 Identifying Revenue Drivers and Segmenting the Sales Forecast

📄 Driver-Based Forecasting: Industry Examples

✍️ Exercise: Forecasting Revenue (Submit by Aug 20)

📄 Identifying Cost Types and Drivers | Forecasting Direct Costs

✍️ Exercise: Forecasting Direct Costs (Submit by Aug 20)

📄 Forecasting General Overhead Expenses (SG&A)

✍️ Exercise: Forecasting Key SG&A Line Items (Submit by Aug 20)

• Identifying key balance sheet account roll-forwards, reconciling beginning/ending balances
• Building out the roll-forward forecasts for all key accounts
• Reviewing common anomalies and nuances within the accounts

📄 Overview of the Balance Sheet

📄 Key Balance Sheet Roll-Forwards

📄 Accounts Receivable (A/R) Roll-Forward

📄 Days Sales Outstanding (DSO) and A/R Aging Analysis

✍️ Exercise: Accounts Receivable Roll-Forward (Submit by Aug 20)

📄 Inventory Roll-Forward

📄 Days Inventory Outstanding (DIO) | Days Inventory On Hand (DOH) Analysis

✍️ Exercise: Inventory Roll-Forward (Submit by Aug 20)

📄 Prepaid Expense Roll-Forward

📄 Accrued Payroll Roll-Forward

✍️ Exercise: Accrued Payroll Roll-Forward (Submit by Aug 20)

📄 Accrued Professional Expenses and Fees Roll-Forward

✍️ Exercise: Accrued Professional Fees Roll-Forward (Submit by Aug 20)

📄 Taxes Payable Roll-Forward

✍️ Exercise: Taxes Roll-Forward (Submit by Aug 20)

📄 Accounts Payable | Accrued Expenses Roll-Forward

📄 Days Payable Outstanding (DPO) Analysis

✍️ Exercise: A/P and Accrued Expenses Roll-Forward (Submit by Aug 20)

📄 Review of the Key Working Capital (WC) Accounts and Roll-Forwards

📄 Capital Expenditures (CapEx) and Fixed Assets Roll-Forward

📄 Intangible Assets Roll-Forward

✍️ Exercise: Fixed Assets and Intangible Assets Roll-Forward (Submit by Aug 20)

📄 Long-Term Debt Roll-Forward

✍️ Exercise: Long-Term Debt Roll-Forward (Submit by Aug 20)

• Connecting the financial statements with plugs and ensuring its integrity
• Finalizing the statement of cash flows
• Building “checks” into models to reconcile indirect cash flow and direct cash flows
• Performing quality review, assessing model mechanics and accounting/operating assumptions

📄 Revisiting the 3-Statement Modeling Process

📄 Building the Statement of Cash Flows

✍️ Exercise: Building the Statement of Cash Flows (Submit by Aug 20)

• Establishing the connections and performing a QC on the integration
• Considering which line items to serve as plugs
• Modeling the revolving line of credit, cash, and other accrued expenses
• Completing the integration

📄 Connecting the Financial Statements

📄 Modeling Plugs and Unknowns — Revolving Lines of Credit, Cash, Accrued Expenses

✍️ Exercise: Revolving Line of Credit Roll-Forward (Submit by Aug 20)

📄 Interest Expense Roll-Forward

✍️ Exercise: Interest Expense Roll-Forward (Submit by Aug 20)

📄 Completing the Integrated Financial and Business Model

• Understanding the limitations of the integrated model
• Considering possible scenarios and sensitivities
• Rolling the model forward for future periods and updating information seamlessly
• Updating the model for actual results

📄 Revisiting the 3-Statement Modeling Process

📄 Performing Quality Review and Error-Checks

📄 Limitations of the Financial Model

📄 Developing a Recurring Process for Updating the Model

• Incorporating a borrowing base forecast of advanced on A/R and inventory
• Building an EBITDA-to-cash bridge forwards and backwards
• Organizing the model for presentations
• Reviewing variances and waterfalls
• Updating the model for operating assumptions
• Reconciling the integrated long-term model with a 13-week cash flow

📄 Advanced Concepts in Integrated Financial and Business Modeling

📄 Borrowing Base Roll-Forward

✍️ Exercise: Borrowing Base Roll-Forward (Submit by Aug 20)

📄 The EBITDA-to-Cash Bridge: Reconciling Profitability with Liquidity

✍️ Exercise: EBITDA-to-Cash Bridge (Submit by Aug 20)

📄 Explaining Hits and Misses: Illustrating With Variances and Waterfalls

📄 Organizing the Model for Presentations

📄 Updating Operating Assumptions and Running Business Scenarios

✍️ Exercise: Actively Manage Costs and Expenses (Submit by Aug 20)

📄 Summary and Final Thoughts