L5a - Financial Statement Modelling

Question 1

What are financial statement models used for?

Answer 1

• Valuing the firm and its securities
• ▪ Credit analyses/financing requirements of the firm

Financial Statment models:

• Sales driven: Almost all financial statement models are sales driven.
• ▪ The important financial statement variables are functions of the level of sales of the company.
• ▪ Excel cuts out much of the hard work.