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Among all my financial models used in last 17 years, Discounted cash flow models is top scorer.
But for sure, 3 Statements model plays the most important role.
Let's see my top 11.
1. FINANCIAL ANALYSIS MODEL
• Everything start with this
Ratio and KPIs calculations
• Include 3 statements preparation and analysis
• Variance analysis, horizontal and vertical analysis
2. REVENUE AND GP MODEL
Seasonality
Churn rates
• Historical revenue and margin analysis
Use different approaches for revenue forecasting
Provides COGS and gross profit calculations
3. CAPEX MODEL
Basis for investment decision
• Includes investment plan with effects
Basis for balance sheet and cash flow planning
4. HEADCOUNT AND SALARIES MODEL
• Approaches bonus schemes
Approaches salary increase policy
Approaches historical records, fluctuation, new employment plan
Provides alignment among business operation
volume and people employed
5. WEEKLY CASH FLOW MODEL
Use direct method of CF calculation
Useful for stabile CF planning in short term
Takes into account CF from current receivables and liabilities
6. FORECASTING MODEL
Forecast anything
• Ideal for monthly forecast of cash flows
• Aligned with company short and long term
objectives
7. COMPARABLE COMPANIES VALUATION
Calculation of multiples
Determination of key metrics
Selection of comparable companies
Determination of median or average multiple and calculate valuation
8. BUDGETING MODEL
Enables advanced budgeting for any company
Most detailed costs analysis and budgeting
Use consistency checks to avoid mistakes
9. DCF VALUATION MODEL
Use WACC
Basis for negotiation
Consider earning potential
• The most important model in business valuation
Incorporates the concept of the time value of money
10. 3 STATEMENTS MODEL (C)
Foundation for various business decision
Holistic view of a company's financial health and
performance
Showcases how different decisions impacts the three major statements
Applicable in valuation, M&A, requirement of investment
11. EBITDA ADJUSTTMENT MODEL
Calculates EBITDA adjustments
• Important for M&A and valuation
• Include adjustment factors analysis
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