FM 003 Case Study - Battersby Bridge model build exercise
Course
41 Lessons
In this course you build an integrated (3 statement) financial model from scratch.
The course is in the form of a case study that takes you step-by-step through a practical demonstration of the principles explained in our course FM002 Building Financial models - step by step.
The course includes more example videos and a worked example of the model as it should look after each exercise.
Welcome to the Financial modelling case study. This is where you get to build your own financial model, with detailed guidance from us.
How to use the case study
Battersby Financial Modelling Case Study from Numeritas.pdf
Build the Profit & Loss (income) statement
Start here - Exercise 1 - Building your Profit & Loss Statement
1 Dough Demo - P&L Account.mp4
AcademyFM101_01a_P&L.xls
Exercise 2 - Flags
AcademyFM101_01b_Flags.xls
Balance sheet basics
Many people find it difficult to build a model with an integrated balance sheet that stays in balance. By building it early and checking that it balances at each stage of our model build, this becomes much simpler to achieve.
Building the balance sheet
AcademyFM101_02_BS.xls
2 Dough Demo - Balance Sheet Report.mp4
Simple Interest Calculations
Interest on cash or overdraft
3 Dough Demo - Interest on cash calculations.mp4
AcademyFM101_03_interest.xls
Fixed Assets & Depreciation
4 Dough Demo - Fixed Assets & Depreciation.mp4
AcademyFM101_04_Fixed Assets.xls
Fixed Asset calcs
Working Capital
In simple terms, working capital is the cash we need to buy raw materials and pay suppliers until our customers pay us. In this case study we are going to deal with three elements of working capital:
Trade debtors (receivables)
Inventory (raw materials, but could also include finished products in other types of business)
Trade creditors (payables)
Working captial calcs
5 Dough Demo - Trade Debtors.mp4
Trade Creditors (Receivables)
AcademyFM101_05_Receivables.xls
Inventory
AcademyFM101_06_Inventory.xls
Trade Creditors (Payables)
AcademyFM101_07_Payables.xls
Cash Flow Statement
Integrated models are often called 'three statement models' as they produce a forecast of P&L (Income Statement), Balance Sheet and Cash Flow Statement.
There are two basic types of Cash Flow Statement - Direct and Indirect. We will build both of them in this section.
6 Dough Demo - Cash flow statement.mp4
Direct Cash Flow Statement
Indirect cash flow statement
AcademyFM101_08_CashFlowStatement.xls
Inflation
Prices tend to rise over time - let's deal with Inflation in our model.
Dealing with inflation
7 Dough Demo - Inflation.mp4
AcademyFM101_09_Inflation.xls
Funding / Financing
Next we are going to add some funding (or financing) to our model.
Most businesses are financed with a mixture of equity (owner's share capital) and debt. We will build these during the exercises in this section.
Exercise 10a Funding
8 Dough Demo - Financing.mp4
AcademyFM101_10a_Funding.xls
Exercise 10b: Servicing of finance
9 Dough Demo - Servicing of Finance.mp4
AcademyFM101_10b_Servicing of finance.xls
Sensitivities
One of the main reasons for building a financial model is to be able to test the business case in different scenarios. It is common to apply 'sensitivities' to key assumptions to assess their impact on the business case. This section shows you how to apply sensitivities to an existing model.
Fine tuning the business case
10 Dough Demo - Sensitivities.mp4
AcademyFM101_11_Sensitivities.xls
Testing
In this section we point you to other Numeritas resources to help you test the model you have built.
The risk of error in modelling is well known - you should always test your model before releasing it into the wild!