Includes bibliographical references and index.

pt. ONE Developing Corporate Finance Models -- ch. 1 Introduction -- 1.1. What is Financial Modelling? -- 1.2. Defining the Inputs and the Outputs of a Simple Financial Model -- 1.3. The Financial Modelling Process of More Complex Models -- 1.3.1. Step 1: Defining the Problem the Model Will Solve: The Fundamental Business Question -- 1.3.2. Step 2: Specification of the Model -- 1.3.3. Step 3: Designing and Building the Model -- 1.3.4. Step 4: Checking the Model's Output -- 1.4. Excel as a Tool of Modelling: Capabilities and Limitations -- ch. 2 A Short Primer in the Accounting of Financial Statements -- 2.1. The Accounting Equation -- 2.2. The Balance Sheet -- 2.3. The Income Statement -- 2.3.1. Cash Accounting Versus Accrual Accounting -- 2.4. The Cash Flow Statement -- 2.4.1. Operating Activities -- 2.4.2. Investing Activities -- 2.4.3. Financing Activities -- 2.4.4. Income Flows and Cash Flows -- 2.4.5. Preparing the Statement of Cash Flows.

2.5. The Articulation of Income Statement, Balance Sheet, and Cash Flow Statements -- 2.6. Financial Statement Analysis: Ratio Analysis -- 2.6.1. Profitability Ratios -- 2.6.2. Liquidity Ratios -- 2.6.3. Solvency Ratios -- 2.6.4. Other Ratios -- 2.6.5. The Limitations of Financial Ratios -- ch. 3 Financial Statement Modelling -- 3.1. Introduction -- How Financial Models Work -- 3.2. Collecting and Analyzing Historical Data -- 3.3. Selecting the Key Forecast Drivers -- 3.4. Modelling the Income Statement -- 3.5. Modelling the Balance Sheet -- 3.6. Modelling Interest and Circular References -- 3.7. Modelling the Cash Flow Statement -- ch. 4 Forecasting Performance -- 4.1. Introduction: Designing a Dashboard-like Control Panel -- 4.2. Basic Statistical Methods Used for Forecasting -- 4.3. Forecasting Sales -- 4.3.1. Bottom-up Versus Top-down Forecasting -- 4.3.2. Forecasting Sales of Existing Products or Services -- 4.4. Forecasting Costs.

4.5. Forecasting CAPEX and Depreciation -- 4.5.1. Forecasting CAPEX and Depreciation for Existing Companies -- 4.6. Forecasting Working Capital and Funding Needs -- 4.6.1. Forecasting Funding Needs -- ch. 5 Business Valuation -- 5.1. Valuation Approaches -- 5.2. Steps for Applying the DCF Method -- 5.3. Rewriting Financial Statements -- Calculation of Free Cash Flows -- 5.4. Calculating the Weighted Average Cost of Capital -- 5.4.1. Calculating the Weighted Average Cost of Capital of SteelCo -- 5.5. Estimating the Terminal Value -- 5.6. DCF Summary -- Enterprise Value Adjustments -- pt. TWO Planning for Uncertainty -- ch. 6 Using Sensitivity Analysis -- 6.1. Introduction -- 6.2. One-Dimensional and 2-Dimensional Sensitivity Analysis -- 6.3. Choosing the Variables to Change -- 6.4. Modelling Example -- 6.4.1. Selecting the Variables to Change -- 6.4.2. Assigning a Range of Values -- 6.4.3. Constructing the 2-dimensional Sensitivity Analysis Table.

6.4.4. Interpreting the Results -- ch. 7 Using Scenarios -- 7.1. Introduction -- 7.2. Using Scenario Analysis with Excel's Scenario Manager -- 7.2.1. Adding 2 More Scenarios -- 7.3. Alternative Ways to Create Scenarios in Excel -- 7.4. Applying Scenarios to SteelCo's Case -- 7.4.1. Deciding on the Number of Scenarios and Input Variables under each Scenario -- 7.4.2. Deciding on the Output Variables -- 7.4.3. Assigning Values to the Input Variables under Each Scenario -- 7.4.4. Building the Scenarios in Excel's Scenario Manager -- 7.4.5. Interpreting the Results -- ch. 8 Using Monte Carlo Simulation -- 8.1. Introduction -- 8.2. Building Uncertainty Directly Into the Modelling Process -- 8.3. Probabilities, Cumulative Probabilities, and Frequency Distribution Charts -- 8.4. Modelling Example -- 8.4.1. Identifying the Key Risk Variables -- 8.4.2. Choosing a Probability Distribution for Each Input Variable -- 8.4.3. Performing the Simulation Runs.

8.4.3.1. The Simple VBA CODE -- 8.4.4. Creating a Histogram (Frequency Distribution Chart) in Excel -- 8.4.5. Interpreting the Results -- 8.4.6. Some Issues of Concern -- Appendix -- 1. Walking through the Excel Model Provided with the Book (SteelCo SA. 4yr Business Plan) -- Introduction -- Structure of the Model -- 2. Other Excel Files Provided with the Book.

This book provides a complete framework of long-term financial forecasts in a practical and accessible way, helping finance professionals include uncertainty in their planning and budgeting process. With thorough coverage of financial statement simulation models and clear, concise implementation instruction, it guides readers through the entire projection plan development process. Readers learn the tools, techniques, and special considerations that increase accuracy and smooth the workflow, and develop a more robust analysis process that improves financial strategy. You will develop long-term projection plans using Excel; use appropriate models to develop a more proactive strategy; apply risk and uncertainty projections more accurately; master the Excel Scenario Manager, Sensitivity Analysis, Monte Carlo Simulation, and more. -- Edited summary from book.

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