Projecting financial statements (P&L, Balance Sheet) is the core to creating financial models. The objective of the model could be to value the firm, budgeting, analysis of financial statements or credit analysis. Irrespective of the objective, you need projections/ forecasting.
The most important aspect of projections is the top line – revenue (typically Price x Volume). Then comes the other line items related to direct and indirect costs, investments and financing. In EduPristine’s Financial Modeling Course, you would learn the art of projecting financial statements. To see a model in action, you can download the financial models for LinkedIn, Facebook and Zynga.
For example, while projecting the revenue for LinkedIn,
Step I: We understand that the revenue is driven by active users
Revenue from Hiring= Number of registered members * hiring charges per registered members
Revenue from marketing= Number of registered members* marketing charges per registered members
Step II: We calculate the historical trend of user acquisition
Step III: We understand the historical trend, merge it with Management Discussion Analsysis (MDA) and Industry reports to assume the drivers for future
You can download and see the complete model in Action from LinkedIn Model. EduPristine’s extensive Financial Modeling course covers this aspect in detail. To know more, quickly write an email to firstname.lastname@example.org.