Mastering Financial Modelling in Microsoft Excel 3rd edn, 3rd Edition

9

Forecasting financials

Introduction

Key drivers

Deriving financial statements

Alternative approaches

Financial analysis

Summary

INTRODUCTION

The last chapter introduced statistical methods for forecasting sales and other variables. This chapter outlines methods for redrawing the historic income statement for future periods using the file MFM3_09_Financial_Analysis. Companies forecast for strategic planning while bankers are interested in calculating the future cash flows of a company for underwriting a loan or project finance facilities. Since the ratio and cash flow analysis in previous chapters was historic, forecasting provides an opportunity for estimating future performance.

Since a model exists in the form of the Financial_Analysis ...