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General Questions

What's up with all the color coding in the file?

We have used best practices to create these models and the color coding is put in place to help you navigate through the model

  • Blue: User inputs (can be a number or a toggle)
  • Green: references to other sheets (this helps you to understand which sheets the numbers are coming from)
  • Orange: First projected cell in the assumptions schedule. Change this and all the cells to the right change similarly

What exactly is projected on the Operating Model?

All income statement items and CapEx

What happens if I get the error, "Model not built successfully?"

Make sure that you have entered the data in the right boxes, and have put labels for each item.

Call us and we can resolve this issue over the phone. We might need you to email us your input file.

What if I only have one year of data?

The model will handle this without any issues

How should I manipulate the assumptions?

You can either directly change the numbers that you want in the model, or you can make changes to the assumption schedules built to the right of each model.

Remember, the blue colored fonts indicate user inputs, so you must remember to fill these out for the model to make sense.

Why is the balance sheet on the LBO is not balancing?

This could be because the starting balance sheet that you provided was not balancing to start with. If this is the case, fix the balance sheet in the UserForm/Input File, and resubmit it to create a new model.

How should I build additional layers of complexity into the model?

Since the model is built in excel, you can create new schedules and formulas and link them with the existing structure in the model. You will not have to worry about the integration issues in the model if this is done properly

What about estimates? EBITDA, EPS, Sales, etc.

The model will project all items using default values that the user needs to change to match research reports/own expectations

I don't like the way CapEx is projected (as a % of sales), how should I change this?

Since this is a model in Excel, you can change the calculations and replace them with your own formulas or your own schedules that you have manually built elsewhere

How do I build additional layers of complexity, such as price/volume analysis to project revenue?

You can create your own schedules to the right or elsewhere on the sheet and link the projected revenue cells to your tailored schedules.

What is used from the operating model on other sheets?

All income statement items down to EBIT.


All non-operating expenses, taxes, interest and other items below EBIT are of no consequence to the other models/sheets.


CapEx.

What exactly is calculated on the WACC sheet?

Cost of capital and its components

Where do the betas and debt/equity information for the comparables come from?

We get them for you for free from Yahoo Finance

What are the key items I should look into before I conduct my WACC analysis?

Risk-free rate

Market risk premium

Tax rate for your company

Target debt/capitalization for your company

What else is interesting about this WACC analysis?

There are two sensitivity tables that are put in place to help you hone in on the cost of capital.

You could use the WACC calculated on this sheet as the discount rate on the DCF.

What are the salient features of the DCF model?

There is a full free cashflow analysis before interest expense

You have the ability to use mid-year convention and a discount rate of your choosing to do a present value calculation

How should I calculate enterprise value, and consequently the equity value of the company?

The present value of the cashflows is essentially the same as the enterprise value. Equity value can be calculated by deducting net debt (debt less cash) from the enterprise value. This is automatically done for you.

Perpetuity or exit multiples method?

You have the option of looking at either or both in tandem depending on the quality of information that you have.

How should I derive cashflows to equity, and directly arrive to an equity value for the company?

This would require some adjustments to the model:

Subtract interest expense from EBIT (you can do this by making an assumption around interest or linking to the interest expense line on the Operating Model). Create a row for interest and adjust the EBIT to get EBT. This would then give you cashflows to equity.

You will have to exclude the net debt calculation as the present value will directly be a reflection of the equity value of the company.

You will have to change the discount rate from WACC to Cost of Equity

What is contained on the balance sheet?

Our model’s balance sheet mirrors the exact number of items that you have included on the user Form.

How are the items on the balance sheet arranged?

They are arranged in a way that is easier to understand for valuation purposes.

The items are placed in 6 broad buckets:

  • Cash
  • Current Assets excluding Cash
  • Other Assets
  • Current Liabilities excluding debt
  • Debt
  • Equity

Where is the projected balance sheet?

From a modeling point of view it made sense to place this right under the projected cashflows in the cashflow tab.

What does the cashflow statement tell me?

The cashflow statement gives the full reconciliation of changes in cash during the accounting period.

You can use the projections to gauge funding requirements and liquidity.

What about the financing section? Can I control debt pay down/ excess payments of debt?

We have built debt paydown schedules which you can manipulate. Remember, each time you paydown more debt, the interest expense also goes down, creating a circularity which reaches an equilibrium after several iterations.

How is the balance sheet projected?

The Balance sheet is projected by using the income statement and the changes in the cash account not reflected on the income statement.

Every single item is projected here. You may tweak the non-income statement items to further gauge the net impact on cash.

How are you carrying out the working capital analysis?

We look at each item under the Current Assets excluding cash, and the Current Liabilities Excluding debt section of the balance sheet and project them out.

How does the program treat different items?

The program understands what the different items are and uses best practices to project each item out.

What is including on this analysis?

  • Full purchase price analysis
  • Sources and uses with a flexible cap structure
  • Make-whole calculator
  • Free cash flow analysis
  • Debt amortization schedules
  • Excess paydown schedules
  • Net income calculation
  • Projected balance sheet
  • Return analysis
  • Credit analysis

What is it that I need to do manually to make the model work?

  • Create a customized debt amortization schedule
  • Set the cost of debt assumptions
  • Set a minimum cash balance
  • Update the forward LIBOR curve
  • Tweak the exit and entry multiples

Operating Model Questions

What's up with all the color coding in the file?

We have used best practices to create these models and the color coding is put in place to help you navigate through the model

  • Blue: User inputs (can be a number or a toggle)
  • Green: references to other sheets (this helps you to understand which sheets the numbers are coming from)
  • Orange: First projected cell in the assumptions schedule. Change this and all the cells to the right change similarly

What exactly is projected on the Operating Model?

All income statement items and CapEx

What happens if I get the error, "Model not built successfully?"

Make sure that you have entered the data in the right boxes, and have put labels for each item.

Call us and we can resolve this issue over the phone. We might need you to email us your input file.

What if I only have one year of data?

The model will handle this without any issues

How should I manipulate the assumptions?

You can either directly change the numbers that you want in the model, or you can make changes to the assumption schedules built to the right of each model.

Remember, the blue colored fonts indicate user inputs, so you must remember to fill these out for the model to make sense.

Why is the balance sheet on the LBO is not balancing?

This could be because the starting balance sheet that you provided was not balancing to start with. If this is the case, fix the balance sheet in the UserForm/Input File, and resubmit it to create a new model.

How should I build additional layers of complexity into the model?

Since the model is built in excel, you can create new schedules and formulas and link them with the existing structure in the model. You will not have to worry about the integration issues in the model if this is done properly

What about estimates? EBITDA, EPS, Sales, etc.

The model will project all items using default values that the user needs to change to match research reports/own expectations

I don't like the way CapEx is projected (as a % of sales), how should I change this?

Since this is a model in Excel, you can change the calculations and replace them with your own formulas or your own schedules that you have manually built elsewhere

How do I build additional layers of complexity, such as price/volume analysis to project revenue?

You can create your own schedules to the right or elsewhere on the sheet and link the projected revenue cells to your tailored schedules.

What is used from the operating model on other sheets?

All income statement items down to EBIT.


All non-operating expenses, taxes, interest and other items below EBIT are of no consequence to the other models/sheets.


CapEx.

What exactly is calculated on the WACC sheet?

Cost of capital and its components

Where do the betas and debt/equity information for the comparables come from?

We get them for you for free from Yahoo Finance

What are the key items I should look into before I conduct my WACC analysis?

Risk-free rate

Market risk premium

Tax rate for your company

Target debt/capitalization for your company

What else is interesting about this WACC analysis?

There are two sensitivity tables that are put in place to help you hone in on the cost of capital.

You could use the WACC calculated on this sheet as the discount rate on the DCF.

What are the salient features of the DCF model?

There is a full free cashflow analysis before interest expense

You have the ability to use mid-year convention and a discount rate of your choosing to do a present value calculation

How should I calculate enterprise value, and consequently the equity value of the company?

The present value of the cashflows is essentially the same as the enterprise value. Equity value can be calculated by deducting net debt (debt less cash) from the enterprise value. This is automatically done for you.

Perpetuity or exit multiples method?

You have the option of looking at either or both in tandem depending on the quality of information that you have.

How should I derive cashflows to equity, and directly arrive to an equity value for the company?

This would require some adjustments to the model:

Subtract interest expense from EBIT (you can do this by making an assumption around interest or linking to the interest expense line on the Operating Model). Create a row for interest and adjust the EBIT to get EBT. This would then give you cashflows to equity.

You will have to exclude the net debt calculation as the present value will directly be a reflection of the equity value of the company.

You will have to change the discount rate from WACC to Cost of Equity

What is contained on the balance sheet?

Our model’s balance sheet mirrors the exact number of items that you have included on the user Form.

How are the items on the balance sheet arranged?

They are arranged in a way that is easier to understand for valuation purposes.

The items are placed in 6 broad buckets:

  • Cash
  • Current Assets excluding Cash
  • Other Assets
  • Current Liabilities excluding debt
  • Debt
  • Equity

Where is the projected balance sheet?

From a modeling point of view it made sense to place this right under the projected cashflows in the cashflow tab.

What does the cashflow statement tell me?

The cashflow statement gives the full reconciliation of changes in cash during the accounting period.

You can use the projections to gauge funding requirements and liquidity.

What about the financing section? Can I control debt pay down/ excess payments of debt?

We have built debt paydown schedules which you can manipulate. Remember, each time you paydown more debt, the interest expense also goes down, creating a circularity which reaches an equilibrium after several iterations.

How is the balance sheet projected?

The Balance sheet is projected by using the income statement and the changes in the cash account not reflected on the income statement.

Every single item is projected here. You may tweak the non-income statement items to further gauge the net impact on cash.

How are you carrying out the working capital analysis?

We look at each item under the Current Assets excluding cash, and the Current Liabilities Excluding debt section of the balance sheet and project them out.

How does the program treat different items?

The program understands what the different items are and uses best practices to project each item out.

What is including on this analysis?

  • Full purchase price analysis
  • Sources and uses with a flexible cap structure
  • Make-whole calculator
  • Free cash flow analysis
  • Debt amortization schedules
  • Excess paydown schedules
  • Net income calculation
  • Projected balance sheet
  • Return analysis
  • Credit analysis

What is it that I need to do manually to make the model work?

  • Create a customized debt amortization schedule
  • Set the cost of debt assumptions
  • Set a minimum cash balance
  • Update the forward LIBOR curve
  • Tweak the exit and entry multiples

WACC

What's up with all the color coding in the file?

We have used best practices to create these models and the color coding is put in place to help you navigate through the model

  • Blue: User inputs (can be a number or a toggle)
  • Green: references to other sheets (this helps you to understand which sheets the numbers are coming from)
  • Orange: First projected cell in the assumptions schedule. Change this and all the cells to the right change similarly

What exactly is projected on the Operating Model?

All income statement items and CapEx

What happens if I get the error, "Model not built successfully?"

Make sure that you have entered the data in the right boxes, and have put labels for each item.

Call us and we can resolve this issue over the phone. We might need you to email us your input file.

What if I only have one year of data?

The model will handle this without any issues

How should I manipulate the assumptions?

You can either directly change the numbers that you want in the model, or you can make changes to the assumption schedules built to the right of each model.

Remember, the blue colored fonts indicate user inputs, so you must remember to fill these out for the model to make sense.

Why is the balance sheet on the LBO is not balancing?

This could be because the starting balance sheet that you provided was not balancing to start with. If this is the case, fix the balance sheet in the UserForm/Input File, and resubmit it to create a new model.

How should I build additional layers of complexity into the model?

Since the model is built in excel, you can create new schedules and formulas and link them with the existing structure in the model. You will not have to worry about the integration issues in the model if this is done properly

What about estimates? EBITDA, EPS, Sales, etc.

The model will project all items using default values that the user needs to change to match research reports/own expectations

I don't like the way CapEx is projected (as a % of sales), how should I change this?

Since this is a model in Excel, you can change the calculations and replace them with your own formulas or your own schedules that you have manually built elsewhere

How do I build additional layers of complexity, such as price/volume analysis to project revenue?

You can create your own schedules to the right or elsewhere on the sheet and link the projected revenue cells to your tailored schedules.

What is used from the operating model on other sheets?

All income statement items down to EBIT.


All non-operating expenses, taxes, interest and other items below EBIT are of no consequence to the other models/sheets.


CapEx.

What exactly is calculated on the WACC sheet?

Cost of capital and its components

Where do the betas and debt/equity information for the comparables come from?

We get them for you for free from Yahoo Finance

What are the key items I should look into before I conduct my WACC analysis?

Risk-free rate

Market risk premium

Tax rate for your company

Target debt/capitalization for your company

What else is interesting about this WACC analysis?

There are two sensitivity tables that are put in place to help you hone in on the cost of capital.

You could use the WACC calculated on this sheet as the discount rate on the DCF.

What are the salient features of the DCF model?

There is a full free cashflow analysis before interest expense

You have the ability to use mid-year convention and a discount rate of your choosing to do a present value calculation

How should I calculate enterprise value, and consequently the equity value of the company?

The present value of the cashflows is essentially the same as the enterprise value. Equity value can be calculated by deducting net debt (debt less cash) from the enterprise value. This is automatically done for you.

Perpetuity or exit multiples method?

You have the option of looking at either or both in tandem depending on the quality of information that you have.

How should I derive cashflows to equity, and directly arrive to an equity value for the company?

This would require some adjustments to the model:

Subtract interest expense from EBIT (you can do this by making an assumption around interest or linking to the interest expense line on the Operating Model). Create a row for interest and adjust the EBIT to get EBT. This would then give you cashflows to equity.

You will have to exclude the net debt calculation as the present value will directly be a reflection of the equity value of the company.

You will have to change the discount rate from WACC to Cost of Equity

What is contained on the balance sheet?

Our model’s balance sheet mirrors the exact number of items that you have included on the user Form.

How are the items on the balance sheet arranged?

They are arranged in a way that is easier to understand for valuation purposes.

The items are placed in 6 broad buckets:

  • Cash
  • Current Assets excluding Cash
  • Other Assets
  • Current Liabilities excluding debt
  • Debt
  • Equity

Where is the projected balance sheet?

From a modeling point of view it made sense to place this right under the projected cashflows in the cashflow tab.

What does the cashflow statement tell me?

The cashflow statement gives the full reconciliation of changes in cash during the accounting period.

You can use the projections to gauge funding requirements and liquidity.

What about the financing section? Can I control debt pay down/ excess payments of debt?

We have built debt paydown schedules which you can manipulate. Remember, each time you paydown more debt, the interest expense also goes down, creating a circularity which reaches an equilibrium after several iterations.

How is the balance sheet projected?

The Balance sheet is projected by using the income statement and the changes in the cash account not reflected on the income statement.

Every single item is projected here. You may tweak the non-income statement items to further gauge the net impact on cash.

How are you carrying out the working capital analysis?

We look at each item under the Current Assets excluding cash, and the Current Liabilities Excluding debt section of the balance sheet and project them out.

How does the program treat different items?

The program understands what the different items are and uses best practices to project each item out.

What is including on this analysis?

  • Full purchase price analysis
  • Sources and uses with a flexible cap structure
  • Make-whole calculator
  • Free cash flow analysis
  • Debt amortization schedules
  • Excess paydown schedules
  • Net income calculation
  • Projected balance sheet
  • Return analysis
  • Credit analysis

What is it that I need to do manually to make the model work?

  • Create a customized debt amortization schedule
  • Set the cost of debt assumptions
  • Set a minimum cash balance
  • Update the forward LIBOR curve
  • Tweak the exit and entry multiples

Discount Cashflow analysis (DCF)

What's up with all the color coding in the file?

We have used best practices to create these models and the color coding is put in place to help you navigate through the model

  • Blue: User inputs (can be a number or a toggle)
  • Green: references to other sheets (this helps you to understand which sheets the numbers are coming from)
  • Orange: First projected cell in the assumptions schedule. Change this and all the cells to the right change similarly

What exactly is projected on the Operating Model?

All income statement items and CapEx

What happens if I get the error, "Model not built successfully?"

Make sure that you have entered the data in the right boxes, and have put labels for each item.

Call us and we can resolve this issue over the phone. We might need you to email us your input file.

What if I only have one year of data?

The model will handle this without any issues

How should I manipulate the assumptions?

You can either directly change the numbers that you want in the model, or you can make changes to the assumption schedules built to the right of each model.

Remember, the blue colored fonts indicate user inputs, so you must remember to fill these out for the model to make sense.

Why is the balance sheet on the LBO is not balancing?

This could be because the starting balance sheet that you provided was not balancing to start with. If this is the case, fix the balance sheet in the UserForm/Input File, and resubmit it to create a new model.

How should I build additional layers of complexity into the model?

Since the model is built in excel, you can create new schedules and formulas and link them with the existing structure in the model. You will not have to worry about the integration issues in the model if this is done properly

What about estimates? EBITDA, EPS, Sales, etc.

The model will project all items using default values that the user needs to change to match research reports/own expectations

I don't like the way CapEx is projected (as a % of sales), how should I change this?

Since this is a model in Excel, you can change the calculations and replace them with your own formulas or your own schedules that you have manually built elsewhere

How do I build additional layers of complexity, such as price/volume analysis to project revenue?

You can create your own schedules to the right or elsewhere on the sheet and link the projected revenue cells to your tailored schedules.

What is used from the operating model on other sheets?

All income statement items down to EBIT.


All non-operating expenses, taxes, interest and other items below EBIT are of no consequence to the other models/sheets.


CapEx.

What exactly is calculated on the WACC sheet?

Cost of capital and its components

Where do the betas and debt/equity information for the comparables come from?

We get them for you for free from Yahoo Finance

What are the key items I should look into before I conduct my WACC analysis?

Risk-free rate

Market risk premium

Tax rate for your company

Target debt/capitalization for your company

What else is interesting about this WACC analysis?

There are two sensitivity tables that are put in place to help you hone in on the cost of capital.

You could use the WACC calculated on this sheet as the discount rate on the DCF.

What are the salient features of the DCF model?

There is a full free cashflow analysis before interest expense

You have the ability to use mid-year convention and a discount rate of your choosing to do a present value calculation

How should I calculate enterprise value, and consequently the equity value of the company?

The present value of the cashflows is essentially the same as the enterprise value. Equity value can be calculated by deducting net debt (debt less cash) from the enterprise value. This is automatically done for you.

Perpetuity or exit multiples method?

You have the option of looking at either or both in tandem depending on the quality of information that you have.

How should I derive cashflows to equity, and directly arrive to an equity value for the company?

This would require some adjustments to the model:

Subtract interest expense from EBIT (you can do this by making an assumption around interest or linking to the interest expense line on the Operating Model). Create a row for interest and adjust the EBIT to get EBT. This would then give you cashflows to equity.

You will have to exclude the net debt calculation as the present value will directly be a reflection of the equity value of the company.

You will have to change the discount rate from WACC to Cost of Equity

What is contained on the balance sheet?

Our model’s balance sheet mirrors the exact number of items that you have included on the user Form.

How are the items on the balance sheet arranged?

They are arranged in a way that is easier to understand for valuation purposes.

The items are placed in 6 broad buckets:

  • Cash
  • Current Assets excluding Cash
  • Other Assets
  • Current Liabilities excluding debt
  • Debt
  • Equity

Where is the projected balance sheet?

From a modeling point of view it made sense to place this right under the projected cashflows in the cashflow tab.

What does the cashflow statement tell me?

The cashflow statement gives the full reconciliation of changes in cash during the accounting period.

You can use the projections to gauge funding requirements and liquidity.

What about the financing section? Can I control debt pay down/ excess payments of debt?

We have built debt paydown schedules which you can manipulate. Remember, each time you paydown more debt, the interest expense also goes down, creating a circularity which reaches an equilibrium after several iterations.

How is the balance sheet projected?

The Balance sheet is projected by using the income statement and the changes in the cash account not reflected on the income statement.

Every single item is projected here. You may tweak the non-income statement items to further gauge the net impact on cash.

How are you carrying out the working capital analysis?

We look at each item under the Current Assets excluding cash, and the Current Liabilities Excluding debt section of the balance sheet and project them out.

How does the program treat different items?

The program understands what the different items are and uses best practices to project each item out.

What is including on this analysis?

  • Full purchase price analysis
  • Sources and uses with a flexible cap structure
  • Make-whole calculator
  • Free cash flow analysis
  • Debt amortization schedules
  • Excess paydown schedules
  • Net income calculation
  • Projected balance sheet
  • Return analysis
  • Credit analysis

What is it that I need to do manually to make the model work?

  • Create a customized debt amortization schedule
  • Set the cost of debt assumptions
  • Set a minimum cash balance
  • Update the forward LIBOR curve
  • Tweak the exit and entry multiples

Historical Balance Sheet

What's up with all the color coding in the file?

We have used best practices to create these models and the color coding is put in place to help you navigate through the model

  • Blue: User inputs (can be a number or a toggle)
  • Green: references to other sheets (this helps you to understand which sheets the numbers are coming from)
  • Orange: First projected cell in the assumptions schedule. Change this and all the cells to the right change similarly

What exactly is projected on the Operating Model?

All income statement items and CapEx

What happens if I get the error, "Model not built successfully?"

Make sure that you have entered the data in the right boxes, and have put labels for each item.

Call us and we can resolve this issue over the phone. We might need you to email us your input file.

What if I only have one year of data?

The model will handle this without any issues

How should I manipulate the assumptions?

You can either directly change the numbers that you want in the model, or you can make changes to the assumption schedules built to the right of each model.

Remember, the blue colored fonts indicate user inputs, so you must remember to fill these out for the model to make sense.

Why is the balance sheet on the LBO is not balancing?

This could be because the starting balance sheet that you provided was not balancing to start with. If this is the case, fix the balance sheet in the UserForm/Input File, and resubmit it to create a new model.

How should I build additional layers of complexity into the model?

Since the model is built in excel, you can create new schedules and formulas and link them with the existing structure in the model. You will not have to worry about the integration issues in the model if this is done properly

What about estimates? EBITDA, EPS, Sales, etc.

The model will project all items using default values that the user needs to change to match research reports/own expectations

I don't like the way CapEx is projected (as a % of sales), how should I change this?

Since this is a model in Excel, you can change the calculations and replace them with your own formulas or your own schedules that you have manually built elsewhere

How do I build additional layers of complexity, such as price/volume analysis to project revenue?

You can create your own schedules to the right or elsewhere on the sheet and link the projected revenue cells to your tailored schedules.

What is used from the operating model on other sheets?

All income statement items down to EBIT.


All non-operating expenses, taxes, interest and other items below EBIT are of no consequence to the other models/sheets.


CapEx.

What exactly is calculated on the WACC sheet?

Cost of capital and its components

Where do the betas and debt/equity information for the comparables come from?

We get them for you for free from Yahoo Finance

What are the key items I should look into before I conduct my WACC analysis?

Risk-free rate

Market risk premium

Tax rate for your company

Target debt/capitalization for your company

What else is interesting about this WACC analysis?

There are two sensitivity tables that are put in place to help you hone in on the cost of capital.

You could use the WACC calculated on this sheet as the discount rate on the DCF.

What are the salient features of the DCF model?

There is a full free cashflow analysis before interest expense

You have the ability to use mid-year convention and a discount rate of your choosing to do a present value calculation

How should I calculate enterprise value, and consequently the equity value of the company?

The present value of the cashflows is essentially the same as the enterprise value. Equity value can be calculated by deducting net debt (debt less cash) from the enterprise value. This is automatically done for you.

Perpetuity or exit multiples method?

You have the option of looking at either or both in tandem depending on the quality of information that you have.

How should I derive cashflows to equity, and directly arrive to an equity value for the company?

This would require some adjustments to the model:

Subtract interest expense from EBIT (you can do this by making an assumption around interest or linking to the interest expense line on the Operating Model). Create a row for interest and adjust the EBIT to get EBT. This would then give you cashflows to equity.

You will have to exclude the net debt calculation as the present value will directly be a reflection of the equity value of the company.

You will have to change the discount rate from WACC to Cost of Equity

What is contained on the balance sheet?

Our model’s balance sheet mirrors the exact number of items that you have included on the user Form.

How are the items on the balance sheet arranged?

They are arranged in a way that is easier to understand for valuation purposes.

The items are placed in 6 broad buckets:

  • Cash
  • Current Assets excluding Cash
  • Other Assets
  • Current Liabilities excluding debt
  • Debt
  • Equity

Where is the projected balance sheet?

From a modeling point of view it made sense to place this right under the projected cashflows in the cashflow tab.

What does the cashflow statement tell me?

The cashflow statement gives the full reconciliation of changes in cash during the accounting period.

You can use the projections to gauge funding requirements and liquidity.

What about the financing section? Can I control debt pay down/ excess payments of debt?

We have built debt paydown schedules which you can manipulate. Remember, each time you paydown more debt, the interest expense also goes down, creating a circularity which reaches an equilibrium after several iterations.

How is the balance sheet projected?

The Balance sheet is projected by using the income statement and the changes in the cash account not reflected on the income statement.

Every single item is projected here. You may tweak the non-income statement items to further gauge the net impact on cash.

How are you carrying out the working capital analysis?

We look at each item under the Current Assets excluding cash, and the Current Liabilities Excluding debt section of the balance sheet and project them out.

How does the program treat different items?

The program understands what the different items are and uses best practices to project each item out.

What is including on this analysis?

  • Full purchase price analysis
  • Sources and uses with a flexible cap structure
  • Make-whole calculator
  • Free cash flow analysis
  • Debt amortization schedules
  • Excess paydown schedules
  • Net income calculation
  • Projected balance sheet
  • Return analysis
  • Credit analysis

What is it that I need to do manually to make the model work?

  • Create a customized debt amortization schedule
  • Set the cost of debt assumptions
  • Set a minimum cash balance
  • Update the forward LIBOR curve
  • Tweak the exit and entry multiples

Cashflow and Balancesheet Projections

What's up with all the color coding in the file?

We have used best practices to create these models and the color coding is put in place to help you navigate through the model

  • Blue: User inputs (can be a number or a toggle)
  • Green: references to other sheets (this helps you to understand which sheets the numbers are coming from)
  • Orange: First projected cell in the assumptions schedule. Change this and all the cells to the right change similarly

What exactly is projected on the Operating Model?

All income statement items and CapEx

What happens if I get the error, "Model not built successfully?"

Make sure that you have entered the data in the right boxes, and have put labels for each item.

Call us and we can resolve this issue over the phone. We might need you to email us your input file.

What if I only have one year of data?

The model will handle this without any issues

How should I manipulate the assumptions?

You can either directly change the numbers that you want in the model, or you can make changes to the assumption schedules built to the right of each model.

Remember, the blue colored fonts indicate user inputs, so you must remember to fill these out for the model to make sense.

Why is the balance sheet on the LBO is not balancing?

This could be because the starting balance sheet that you provided was not balancing to start with. If this is the case, fix the balance sheet in the UserForm/Input File, and resubmit it to create a new model.

How should I build additional layers of complexity into the model?

Since the model is built in excel, you can create new schedules and formulas and link them with the existing structure in the model. You will not have to worry about the integration issues in the model if this is done properly

What about estimates? EBITDA, EPS, Sales, etc.

The model will project all items using default values that the user needs to change to match research reports/own expectations

I don't like the way CapEx is projected (as a % of sales), how should I change this?

Since this is a model in Excel, you can change the calculations and replace them with your own formulas or your own schedules that you have manually built elsewhere

How do I build additional layers of complexity, such as price/volume analysis to project revenue?

You can create your own schedules to the right or elsewhere on the sheet and link the projected revenue cells to your tailored schedules.

What is used from the operating model on other sheets?

All income statement items down to EBIT.


All non-operating expenses, taxes, interest and other items below EBIT are of no consequence to the other models/sheets.


CapEx.

What exactly is calculated on the WACC sheet?

Cost of capital and its components

Where do the betas and debt/equity information for the comparables come from?

We get them for you for free from Yahoo Finance

What are the key items I should look into before I conduct my WACC analysis?

Risk-free rate

Market risk premium

Tax rate for your company

Target debt/capitalization for your company

What else is interesting about this WACC analysis?

There are two sensitivity tables that are put in place to help you hone in on the cost of capital.

You could use the WACC calculated on this sheet as the discount rate on the DCF.

What are the salient features of the DCF model?

There is a full free cashflow analysis before interest expense

You have the ability to use mid-year convention and a discount rate of your choosing to do a present value calculation

How should I calculate enterprise value, and consequently the equity value of the company?

The present value of the cashflows is essentially the same as the enterprise value. Equity value can be calculated by deducting net debt (debt less cash) from the enterprise value. This is automatically done for you.

Perpetuity or exit multiples method?

You have the option of looking at either or both in tandem depending on the quality of information that you have.

How should I derive cashflows to equity, and directly arrive to an equity value for the company?

This would require some adjustments to the model:

Subtract interest expense from EBIT (you can do this by making an assumption around interest or linking to the interest expense line on the Operating Model). Create a row for interest and adjust the EBIT to get EBT. This would then give you cashflows to equity.

You will have to exclude the net debt calculation as the present value will directly be a reflection of the equity value of the company.

You will have to change the discount rate from WACC to Cost of Equity

What is contained on the balance sheet?

Our model’s balance sheet mirrors the exact number of items that you have included on the user Form.

How are the items on the balance sheet arranged?

They are arranged in a way that is easier to understand for valuation purposes.

The items are placed in 6 broad buckets:

  • Cash
  • Current Assets excluding Cash
  • Other Assets
  • Current Liabilities excluding debt
  • Debt
  • Equity

Where is the projected balance sheet?

From a modeling point of view it made sense to place this right under the projected cashflows in the cashflow tab.

What does the cashflow statement tell me?

The cashflow statement gives the full reconciliation of changes in cash during the accounting period.

You can use the projections to gauge funding requirements and liquidity.

What about the financing section? Can I control debt pay down/ excess payments of debt?

We have built debt paydown schedules which you can manipulate. Remember, each time you paydown more debt, the interest expense also goes down, creating a circularity which reaches an equilibrium after several iterations.

How is the balance sheet projected?

The Balance sheet is projected by using the income statement and the changes in the cash account not reflected on the income statement.

Every single item is projected here. You may tweak the non-income statement items to further gauge the net impact on cash.

How are you carrying out the working capital analysis?

We look at each item under the Current Assets excluding cash, and the Current Liabilities Excluding debt section of the balance sheet and project them out.

How does the program treat different items?

The program understands what the different items are and uses best practices to project each item out.

What is including on this analysis?

  • Full purchase price analysis
  • Sources and uses with a flexible cap structure
  • Make-whole calculator
  • Free cash flow analysis
  • Debt amortization schedules
  • Excess paydown schedules
  • Net income calculation
  • Projected balance sheet
  • Return analysis
  • Credit analysis

What is it that I need to do manually to make the model work?

  • Create a customized debt amortization schedule
  • Set the cost of debt assumptions
  • Set a minimum cash balance
  • Update the forward LIBOR curve
  • Tweak the exit and entry multiples

Working Capital

What's up with all the color coding in the file?

We have used best practices to create these models and the color coding is put in place to help you navigate through the model

  • Blue: User inputs (can be a number or a toggle)
  • Green: references to other sheets (this helps you to understand which sheets the numbers are coming from)
  • Orange: First projected cell in the assumptions schedule. Change this and all the cells to the right change similarly

What exactly is projected on the Operating Model?

All income statement items and CapEx

What happens if I get the error, "Model not built successfully?"

Make sure that you have entered the data in the right boxes, and have put labels for each item.

Call us and we can resolve this issue over the phone. We might need you to email us your input file.

What if I only have one year of data?

The model will handle this without any issues

How should I manipulate the assumptions?

You can either directly change the numbers that you want in the model, or you can make changes to the assumption schedules built to the right of each model.

Remember, the blue colored fonts indicate user inputs, so you must remember to fill these out for the model to make sense.

Why is the balance sheet on the LBO is not balancing?

This could be because the starting balance sheet that you provided was not balancing to start with. If this is the case, fix the balance sheet in the UserForm/Input File, and resubmit it to create a new model.

How should I build additional layers of complexity into the model?

Since the model is built in excel, you can create new schedules and formulas and link them with the existing structure in the model. You will not have to worry about the integration issues in the model if this is done properly

What about estimates? EBITDA, EPS, Sales, etc.

The model will project all items using default values that the user needs to change to match research reports/own expectations

I don't like the way CapEx is projected (as a % of sales), how should I change this?

Since this is a model in Excel, you can change the calculations and replace them with your own formulas or your own schedules that you have manually built elsewhere

How do I build additional layers of complexity, such as price/volume analysis to project revenue?

You can create your own schedules to the right or elsewhere on the sheet and link the projected revenue cells to your tailored schedules.

What is used from the operating model on other sheets?

All income statement items down to EBIT.


All non-operating expenses, taxes, interest and other items below EBIT are of no consequence to the other models/sheets.


CapEx.

What exactly is calculated on the WACC sheet?

Cost of capital and its components

Where do the betas and debt/equity information for the comparables come from?

We get them for you for free from Yahoo Finance

What are the key items I should look into before I conduct my WACC analysis?

Risk-free rate

Market risk premium

Tax rate for your company

Target debt/capitalization for your company

What else is interesting about this WACC analysis?

There are two sensitivity tables that are put in place to help you hone in on the cost of capital.

You could use the WACC calculated on this sheet as the discount rate on the DCF.

What are the salient features of the DCF model?

There is a full free cashflow analysis before interest expense

You have the ability to use mid-year convention and a discount rate of your choosing to do a present value calculation

How should I calculate enterprise value, and consequently the equity value of the company?

The present value of the cashflows is essentially the same as the enterprise value. Equity value can be calculated by deducting net debt (debt less cash) from the enterprise value. This is automatically done for you.

Perpetuity or exit multiples method?

You have the option of looking at either or both in tandem depending on the quality of information that you have.

How should I derive cashflows to equity, and directly arrive to an equity value for the company?

This would require some adjustments to the model:

Subtract interest expense from EBIT (you can do this by making an assumption around interest or linking to the interest expense line on the Operating Model). Create a row for interest and adjust the EBIT to get EBT. This would then give you cashflows to equity.

You will have to exclude the net debt calculation as the present value will directly be a reflection of the equity value of the company.

You will have to change the discount rate from WACC to Cost of Equity

What is contained on the balance sheet?

Our model’s balance sheet mirrors the exact number of items that you have included on the user Form.

How are the items on the balance sheet arranged?

They are arranged in a way that is easier to understand for valuation purposes.

The items are placed in 6 broad buckets:

  • Cash
  • Current Assets excluding Cash
  • Other Assets
  • Current Liabilities excluding debt
  • Debt
  • Equity

Where is the projected balance sheet?

From a modeling point of view it made sense to place this right under the projected cashflows in the cashflow tab.

What does the cashflow statement tell me?

The cashflow statement gives the full reconciliation of changes in cash during the accounting period.

You can use the projections to gauge funding requirements and liquidity.

What about the financing section? Can I control debt pay down/ excess payments of debt?

We have built debt paydown schedules which you can manipulate. Remember, each time you paydown more debt, the interest expense also goes down, creating a circularity which reaches an equilibrium after several iterations.

How is the balance sheet projected?

The Balance sheet is projected by using the income statement and the changes in the cash account not reflected on the income statement.

Every single item is projected here. You may tweak the non-income statement items to further gauge the net impact on cash.

How are you carrying out the working capital analysis?

We look at each item under the Current Assets excluding cash, and the Current Liabilities Excluding debt section of the balance sheet and project them out.

How does the program treat different items?

The program understands what the different items are and uses best practices to project each item out.

What is including on this analysis?

  • Full purchase price analysis
  • Sources and uses with a flexible cap structure
  • Make-whole calculator
  • Free cash flow analysis
  • Debt amortization schedules
  • Excess paydown schedules
  • Net income calculation
  • Projected balance sheet
  • Return analysis
  • Credit analysis

What is it that I need to do manually to make the model work?

  • Create a customized debt amortization schedule
  • Set the cost of debt assumptions
  • Set a minimum cash balance
  • Update the forward LIBOR curve
  • Tweak the exit and entry multiples

Leveraged Buyout Analysis

What's up with all the color coding in the file?

We have used best practices to create these models and the color coding is put in place to help you navigate through the model

  • Blue: User inputs (can be a number or a toggle)
  • Green: references to other sheets (this helps you to understand which sheets the numbers are coming from)
  • Orange: First projected cell in the assumptions schedule. Change this and all the cells to the right change similarly

What exactly is projected on the Operating Model?

All income statement items and CapEx

What happens if I get the error, "Model not built successfully?"

Make sure that you have entered the data in the right boxes, and have put labels for each item.

Call us and we can resolve this issue over the phone. We might need you to email us your input file.

What if I only have one year of data?

The model will handle this without any issues

How should I manipulate the assumptions?

You can either directly change the numbers that you want in the model, or you can make changes to the assumption schedules built to the right of each model.

Remember, the blue colored fonts indicate user inputs, so you must remember to fill these out for the model to make sense.

Why is the balance sheet on the LBO is not balancing?

This could be because the starting balance sheet that you provided was not balancing to start with. If this is the case, fix the balance sheet in the UserForm/Input File, and resubmit it to create a new model.

How should I build additional layers of complexity into the model?

Since the model is built in excel, you can create new schedules and formulas and link them with the existing structure in the model. You will not have to worry about the integration issues in the model if this is done properly

What about estimates? EBITDA, EPS, Sales, etc.

The model will project all items using default values that the user needs to change to match research reports/own expectations

I don't like the way CapEx is projected (as a % of sales), how should I change this?

Since this is a model in Excel, you can change the calculations and replace them with your own formulas or your own schedules that you have manually built elsewhere

How do I build additional layers of complexity, such as price/volume analysis to project revenue?

You can create your own schedules to the right or elsewhere on the sheet and link the projected revenue cells to your tailored schedules.

What is used from the operating model on other sheets?

All income statement items down to EBIT.


All non-operating expenses, taxes, interest and other items below EBIT are of no consequence to the other models/sheets.


CapEx.

What exactly is calculated on the WACC sheet?

Cost of capital and its components

Where do the betas and debt/equity information for the comparables come from?

We get them for you for free from Yahoo Finance

What are the key items I should look into before I conduct my WACC analysis?

Risk-free rate

Market risk premium

Tax rate for your company

Target debt/capitalization for your company

What else is interesting about this WACC analysis?

There are two sensitivity tables that are put in place to help you hone in on the cost of capital.

You could use the WACC calculated on this sheet as the discount rate on the DCF.

What are the salient features of the DCF model?

There is a full free cashflow analysis before interest expense

You have the ability to use mid-year convention and a discount rate of your choosing to do a present value calculation

How should I calculate enterprise value, and consequently the equity value of the company?

The present value of the cashflows is essentially the same as the enterprise value. Equity value can be calculated by deducting net debt (debt less cash) from the enterprise value. This is automatically done for you.

Perpetuity or exit multiples method?

You have the option of looking at either or both in tandem depending on the quality of information that you have.

How should I derive cashflows to equity, and directly arrive to an equity value for the company?

This would require some adjustments to the model:

Subtract interest expense from EBIT (you can do this by making an assumption around interest or linking to the interest expense line on the Operating Model). Create a row for interest and adjust the EBIT to get EBT. This would then give you cashflows to equity.

You will have to exclude the net debt calculation as the present value will directly be a reflection of the equity value of the company.

You will have to change the discount rate from WACC to Cost of Equity

What is contained on the balance sheet?

Our model’s balance sheet mirrors the exact number of items that you have included on the user Form.

How are the items on the balance sheet arranged?

They are arranged in a way that is easier to understand for valuation purposes.

The items are placed in 6 broad buckets:

  • Cash
  • Current Assets excluding Cash
  • Other Assets
  • Current Liabilities excluding debt
  • Debt
  • Equity

Where is the projected balance sheet?

From a modeling point of view it made sense to place this right under the projected cashflows in the cashflow tab.

What does the cashflow statement tell me?

The cashflow statement gives the full reconciliation of changes in cash during the accounting period.

You can use the projections to gauge funding requirements and liquidity.

What about the financing section? Can I control debt pay down/ excess payments of debt?

We have built debt paydown schedules which you can manipulate. Remember, each time you paydown more debt, the interest expense also goes down, creating a circularity which reaches an equilibrium after several iterations.

How is the balance sheet projected?

The Balance sheet is projected by using the income statement and the changes in the cash account not reflected on the income statement.

Every single item is projected here. You may tweak the non-income statement items to further gauge the net impact on cash.

How are you carrying out the working capital analysis?

We look at each item under the Current Assets excluding cash, and the Current Liabilities Excluding debt section of the balance sheet and project them out.

How does the program treat different items?

The program understands what the different items are and uses best practices to project each item out.

What is including on this analysis?

  • Full purchase price analysis
  • Sources and uses with a flexible cap structure
  • Make-whole calculator
  • Free cash flow analysis
  • Debt amortization schedules
  • Excess paydown schedules
  • Net income calculation
  • Projected balance sheet
  • Return analysis
  • Credit analysis

What is it that I need to do manually to make the model work?

  • Create a customized debt amortization schedule
  • Set the cost of debt assumptions
  • Set a minimum cash balance
  • Update the forward LIBOR curve
  • Tweak the exit and entry multiples


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