Week 3 Financial Modeling cost build up

Posts: 1
Joined: Wed May 21, 2014 10:39 am

Week 3 Financial Modeling cost build up

Postby davidblumberg54 » Thu May 29, 2014 12:37 am


I assume by RM you are talking about finished goods. I have to go back and review but where are beginning / end of the period inventories considered? You appear to be only looking at sales of inventory.

Historical RM (assume finished goods) costs are entered and sales are entered in the P&L. The purpose of sales and cost build up seems to be to verify the historical numbers. Is this right? And once you verify then you may go forward and calculate projections?

Company I work for has 28 products in 4 different sizes and with over 50 raw materials with about 20 used in more than 1 product. The process you have explained seems extremely cumbersome. What are the alternatives?


David DavidBlumberg54@Gmail.com

Posts: 5
Joined: Wed Apr 03, 2013 9:45 pm

Week 3 Financial Modeling cost build up

Postby pristine » Fri May 30, 2014 5:35 am

Hi David,
I am assuming that the scope of the your question is confined to " Week 3 Financial Modelling Cost Build Up " `exercise as explainded by Paramdeep.

1) We can also build the model using beginning/end of the period inventories but in this particular model, for simplicity we have only considered sales of inventory.

2) In this cost build up exercise, Paramdeep has explained the underlying methodology to to arrive at total RM cost in a very lucid manner. Once the cost has been calculated for a financial year, it can rightly be projected for future time periods.

3) For building up a financial model for your company, I would suggest start preparing it using the methodology as explained. Once you have a strong hold on the basic concepts used in this modelling, you will find it easy.

Nevertheless, please start preparing the model, and whereever you get stuck, I would be happy to help you out.


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