Welcome to this Felix Modeling challenge. Now, in this challenge, we need to read through this handout and then I'll take you through how to update a model. So pause the recording for just a second and have a read through.

Great. Now I want to take you through the major items in this handouts. First of all, we're told one of our colleagues has input some data, but the ND has asked you to review and update these forecast assumptions. So that's the biggest task we have. We have to come up with our forecast assumptions. I think that's definitely the trickiest. We've also got to do the cash flow statement, do some interest. They're quite mechanical and they can be challenging, but forecasting figures for a company is always going to be uncertain and tricky. So we're gonna be focusing our time on that.

We're also told that we can have a look at Felix data to come up with some consensus estimates. That's great. So we'll have to get our forecast in line with those consensus estimates. Really important to point out though, that the solution we're giving you here is at a certain date, your numbers will look a bit different because you are using live financial data, but your overall conclusion and your analysis should be the same as ours.

So let's pull out some noteworthy facts. Firstly, it says during 2023, the company faced considerable cost inflation pressures and that has had negative effects on revenue and on margins. However, we're told that that's going to ease from 2025 onwards, and we're given some guidance about long-term EBITDA margins of 8%. So we'll have to work out how to fill that gap there. We're also given industry research on growth. We've got a keg of 10% over five years, 5% thereafter. Again, we'll have to plug some gaps. Marketing spend is going to return to 2022 levels, but we're then given some really important information about leases. Now their leases are going to grow considerably. That's going to impact the balance sheet, lease assets and liabilities. It'll impact the lease expense on the income statement and the cash flow. So we'll have to be quite careful what we do there. But we'll show you a nice simplification for the cashflow statements.

Then we're told the company has stock options and some other expenses. We'll have to make sure we put them into the model correctly.

Inventory levels are going to change. And lastly, in the last bullet here, really important one, the company did have a line of credit that's going to mature in March 26, and it prevented dividends being paid to shareholders.

If that's going to mature, then we can assume dividend payments might commence. That will help us to prevent build up cash on the balance sheet. So we'll definitely have a good look at that one.