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Introduction to Modeling

Learn how to build a simple income statement, balance sheet, and cash flow statement, as well as how to prepare a completed model for handover.

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14 Lessons (45m)

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  • Description & Objectives

  • 1. The Forecasting Process

    01:35
  • 2. Model Structure - Design Choices

    04:00
  • 3. IS, BS and CFS Integration

    02:29
  • 4. Forecast Model Simple 1

    03:48
  • 5. Forecast Model Simple 2 - IS and BS

    02:52
  • 6. Forecast Model Simple 2 - CFS Prep

    03:04
  • 7. Forecast Model Simple 2 - CFS Finish

    03:18
  • 8. Build the Forecast Balance Sheet - Back Up Calculations

    02:57
  • 9. Forecast Model Simple 3 - Intro and IS

    03:36
  • 10. Forecast Model Simple 3 - Balance Sheet

    03:38
  • 11. Forecast Model Simple 3 - BS Calcs

    04:07
  • 12. Forecast Model Simple 3 - CFS

    04:29
  • 13. Forecast Model Simple 3 - CFS Calcs and Finish

    04:46
  • 14. Introduction to Modeling Tryout


Prev: Menu and Shortcut Basics Next: 3 Statement Modeling with Iterations

Build the Forecast Balance Sheet - Back Up Calculations

  • Notes
  • Questions
  • Transcript
  • 02:57

Understand how to construct supporting calculations for the balance sheet

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Glossary

Debt Workings PP&E BASE Retained Earnings BASE
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Transcript

Here's our completed balance sheet, but there are three items that still require some calculation. PP&E or property plant equipment long-term debt and retained earnings. As we do the calculations for those three items we will also find some helpful other figures which will go on the cashier statements. Let's start with pp&e or property plant and equipment. Here we need to do a base analysis for pp&e and a base stands for beginning. Add subtract end. This says that you take your beginning pp&e and then you add on capex or capital expenditure you subtract off depreciation and that gets you to your ending pp&e figure. That ending pp&e figure is what goes on the balance sheet. But we've also found two extra figures that will go into the cash flow statements. The first of these was capex or capital expenditure and we need to decide which section of the cash flow statement. It's going to go into Capex goes in the investing cash flow section. The other figure we found was depreciation. Depreciation also goes in the cash flow statements as an add back to net income. This will go in the operating cash flow section. We now move on to our second item, which is long-term debt. And again, we need to do a base analysis here. I start with my beginning debt. I add on the issuance of debt. I subtract repayments of debt and that gets me to my ending date. That ending debt goes on to the balance sheet. Fantastic. again We've got two figures supplied to us, which are going to help us out on the cash flow statements. The issuance of debts and the repayment of debt they both go into the financing cash flow section of the cash flow statements. The issuance of debt that makes your cash flow go up and a repayment of that sadly that makes your cash flow go down or it's shown as a negative cash flow. The third and final section is retained earnings. We can do another base analysis here. You start with your beginning retained earnings you add on net income, subtract off dividends, and that gets you to your ending retained earnings that ending retained earnings figure that can go onto the balance sheet. But again, we've got two more figures that are going to go into the cash flow statement as well. Net income that goes into your operating cash flow section and your dividends paid that goes into the financing cash flow section.

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CPE exams do not count towards your FE certification. You do not need to complete the CPE exam if you are not collecting CPE credits, but you might find it useful for your own revision.


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