Preparing an integrated financial model from the scratch for the equity valuation has always been a daunting task which requires both finance acumen and patience. Here is a challenging problem which checks both of these much-required qualities of a good modeler.

Problem

You are provided with the template of the LinkedIn incomplete model, which you need to figure out and complete. The blanks are highlighted with yellow color.

Following are 4 problems which you need to solve:

  1. Revenue Build-Up Sheet:
    • Making the projections for Number of registered Members and Corporate Solution Customers
    • Calculating the Quarterly Revenue from each head: Hiring Solution Revenue, Marketing Solution Revenue, Premium Solution Revenue
    • Finally consolidating quarterly revenues into yearly numbers and updating the P&L statement.
  2. Cash Flow Statement:
    • Preparing the complete Cash flow statement from the Profit & Loss statement and Balance sheet.
    • Updating the balance sheet by linking the Cash and Cash Equivalents row.
  3. Valuation Sheet:
    • Calculating the cost of Equity
    • Calculating the FCFF and FCFE and then discounting these free cash flows to get the Equity Value of the firm.
  4. Balance Sheet and P&L Sheet:
    • The Cash balance on the balance sheet will also earn some interest rate on it. Let suppose 4% per annum. Also if the cash balance of the company goes negative, they have any overdraft facility which charges at 6% per annum. You need to incorporate this interest calculation in the model.

 

How to submit?

You can submit your answer files mailing us at: contests@edupristine.com

What the duration of the contest?

Contest is open from 11 AM, 19thFeb, 2011 till 9 A.M. IST 21st Feb, 2011.