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EduPristine>Blog>Modeling Balance Sheet Drivers

Modeling Balance Sheet Drivers

February 23, 2012

Till date, we have modeled the historical statements (P/L, B/S & Cash Flow Statement) and P/L drivers. Today’s post is to help you in modeling balance sheet drivers.

Balance Sheet Drivers

Balance sheet drivers are both mixed and pure ratios. By mixed ratio we mean ratios calculated taking into consideration both P/L and B/S line items and pure rations means ratios calculated using only the B/S line items.

Balance Sheet Drivers

A/c receivable Turnover = Revenue/Average Receivable

Days of Account Receivable = 365/A/c Receivable Turnover

I.e. Days of Account Receivable = Average A/c Receivable/ (Revenue/365)

Using the same formula you can calculate the payable in days, calculate prepaid and accrued expenses by calculating year-on-year growth rate and other drivers as %age of revenue.

Please note that this is a simple model and hence the drivers are simple. And also note that we will use these drivers to project the future Balance Sheet of Facebook.

If you find any problem in modeling B/S drivers feel free to discuss this in our comments or email me your queries, we would love to answer you queries.

Next Steps

2moro we will release filled template of historical drivers (both P/L & B/S drivers), so that you can check your progress.

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Trusted by Fortune 500 Companies and 10,000 Students from 40+ countries across the globe, it is one of the leading International Training providers for Finance Certifications like FRM®, CFA®, PRM®, Business Analytics, HR Analytics, Financial Modeling, and Operational Risk Modeling. EduPristine has conducted more than 500,000 man-hours of quality training in finance.

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