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
Advanced issues including circular references and stable capital structures