Step by Step Corporate Finance Model

This page describes how to build a corporate model on a step by step basis.  The step by step corporate modelling includes practical details on alternative ways to put historic data into your models; to alternative methods for developing assumptions including presentation of assumptions compared to history and testing alternative strategies; constructing the model in a structured and transparent manner including adjustment for fixed debt issues; adjusting depreciation for retirements and changing growth; computing free cash flow and developing alternative valuation methods; and, addressing advanced issues including circular references and stable capital structures.  In explaining the different steps for creating a model I use a few examples from India.

 

Putting Historic Data into Your Models

This shows you how to use the database and how to use the read pdf program to acquire data. Before I developed the read pdf file or the financial database file, I used to try to create a relevant a case example for companies in my classes.  I would get financial reports and then struggle with pdf files trying to retrieve the data.  It would take hours and hours.  That is why I started to develop the read pdf file.  I then modified my file for reading in data and after a participant from Switzerland told me he uses Market Watch I finally understood that you could get historical financial statements from the internet. So, in describing how to set-up a financial model I begin with description of how to retrieve data in a from a practical standpoint. I am using companies in India to illustrate the process.

 

 

 

 

I used to hate classes where I tried to get the financial reports and then come up with different ways to get the data into models.

 

 

 

In describing steps I also discuss theoretical issues.

Alternative Methods for Developing Assumptions

including presentation of assumptions compared to history and testing alternative strategies;

Evaluate assumptions with ROIC.

Constructing the model in a structured and transparent manner

including adjustment for fixed debt issues;

Adjusting Depreciation for Retirements and Changing Growth

You can find more information on another page

Computing free cash flow and developing alternative valuation methods

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Advanced issues including circular references and stable capital structures