12. Expectations, Modeling, and Scenarios

What’s in this chapter:

• How to drive revenue in a simple model

• How to factor EBITDA and free cash flow generation into a model

• How to build out debt and interest expense

• How to factor in debt refinancing

• Simple scenario analysis

The information presented in this book so far has all been backward-looking. An analyst also wants to try creating an idea of what the company might look like going forward.

The analyst can build a single model or a series of scenarios of how a company might perform going forward. As with most forecasting, this involves a certain amount of extrapolation from past performance and expectations about what the general economy may be like, as well as what competitors and ...

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