Financial modelling and projections
Structured spreadsheet models that turn business assumptions into projected profit and loss, balance sheet, cash flow and valuation. A model is useful only if others can follow it and test it.
Scope
What the work covers
Banks, investors and boards all ask the same questions in different forms: what will the business earn, how much cash will it need, and can it repay what it borrows? A well-built model answers these questions and shows how the answers change when assumptions change.
Models are built with inputs, calculations and outputs kept separate, clear labelling, and checks that confirm the balance sheet balances and cash reconciles. That makes them easy to review and update.
- Integrated three-statement models (profit and loss, balance sheet, cash flow)
- Project finance models with debt service coverage ratio (DSCR) and loan repayment schedules
- Projections and CMA data for bank term loans and working capital limits
- Business plans and financial projections for investor discussions
- Budgets, scenarios and sensitivity analysis
- Valuation support using discounted cash flow
- Review of existing models for errors, broken links and logic
Approach
How the work is done
Agree the purpose
Who will use the model and for what decision decides its structure, level of detail and time period.
Gather assumptions
Volumes, prices, costs, capital expenditure and funding are agreed with management and recorded with their source.
Build and check
The model is built with integrity checks throughout, then tested with alternative scenarios.
Explain
A short note explains the key assumptions and results, so the model can be presented to a bank or investor with confidence.
Getting started
Records to keep ready
- Historical financial statements for two to three years, where available
- Project cost estimates and quotations, for new projects
- Any lender or investor requirements on format
- Management's view of volumes, prices and costs
Background
Ryan Vaz, FCA has prepared and defended models in front of lenders as a CFO, including for a USD 35 million bank financing, and built project models for highway and manufacturing businesses. See experience and expertise.
Fees
Fees depend on the scope of work, the volume and condition of records and the time required, and are confirmed in writing in an engagement letter before work begins.
Questions about financial modelling
What is a three-statement financial model?
It is a model in which the projected profit and loss account, balance sheet and cash flow statement are linked, so that a change in one assumption flows through all three. It is the standard format for bank and investor projections.
What is DSCR and why do banks ask for it?
The debt service coverage ratio compares cash available for debt service with the principal and interest due in a period. Banks use it to judge whether a project or business can repay a loan, and usually require a minimum average ratio over the loan term.
Can you review a model someone else built?
Yes. A model review checks formulas, links, assumptions and integrity, and reports errors and risks before the model is relied on for a decision or submitted to a lender.
Which software is used for financial models?
Most models are built in Microsoft Excel because lenders and investors expect it. Google Sheets can be used where collaboration matters more, and Python is used for heavier scenario analysis.
Contact
Phone +91 95384 16161 or email ryan@vazassociates.in. Office opposite Maxus Mall, L.T. Road, Borivali West, Mumbai 400092. Work can also be handled remotely.