Facebook IPO and its valuation has generated enormous interest in the investor community (both retail and institutional)throughout the world. Many potential investors want a financial model in MS Excel© which can help them in a thorough analysis of the company. Creating such models have always been a time-taking and daunting exercise. Pristine has created an [...]

We have finally completed our financial model on the Chocolate business, and here are the steps. I am concluding this Financial Modeling series in one summary post. The first thing you do in creating your Financial Model, is to create an Income Statement (also known as a Profit and Loss statement) You will need to [...]

The sustainable growth rate (SGR) measures how fast a firm can grow without infusing any additional external equity and without borrowing additional funds i.e. keeping the leverage constant. Continuing with our chocolate business example: Suppose your chocolate business is 2 year old and experiencing a good acceptance in the market. Now you as the owner [...]

The DuPont Analysis is an approach that breaks down ROE (Return on Equity) into a function of 3 or 5 ratios that helps to see the impact of each ratio on ROE. Suppose you are going through the financial ratios of our company and stop at ROE and wondering what are the factors that are [...]

Ratios are a tool for expressing the relationship between various accounting data that can be used for both internal and external comparisons. Financial Ratio analysis as a whole is used for evaluating the financial condition and performance of a business. Continuing with our example: Suppose your chocolate business is now two years old, and you [...]

Cash flow statement provides information about a firm’s cash receipt and cash payments during a specific period. That is, it provides information about sources and uses of cash in the business. If you remember in our Profit and loss statement article we have mentioned that profit and loss statement is prepared on the basis of [...]

Balance sheet reports the financial position of a firm as of a specific date. That is it reveals the firm’s assets, liabilities and shareholder’s equity position. Some key points to note in a Balance Sheet: Balance Sheet gives bird eye view of a firm’s financial position. Balance Sheet is drawn for a specific date. Balance [...]

What is Debt? Debt is the fund borrowed from one party by the other party i.e. debt is an obligation owed by the borrower of fund to the lender of fund. Debt is not available freely it has a cost called interest expense. Interest expense is the cost paid by the borrower for the use [...]

Lessons to be learned from the Zynga IPO, which was overvalued at first, but later came down to its fair valuation. We show that the key might lie in the share holding pattern.

Excel as a Data Store I think over the last couple of years, I would have conducted 100’s of days of workshops concepts involving excel. I love posing the following question to the participants: Do you know Excel? I think if I would have asked this question to 1000 participants, I would have got a [...]