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We already have the assumptions for modeling Financial Statement Analysis of Facebook in place with us. In the last tutorial we had started discussing regarding projecting future P/L, B/S and CFS of Facebook. We also had released a simple template for modeling future P/L, B/S and CFS of Facebook.
Projecting future financial statements is a part of complete financial analysis, done by using the assumptions modeled for the subject company. These Projecting Financial Statement Analysis for Facebook (P/L, B/S and CFS) are than used in present value based formula (DCF) to access a company's market value. Today I give you a simple hint on using assumption to model the Projecting Financial Statement for Facebook and you should try to build the future statements of Facebook on your own.
Modeling future P/L Statement uses the assumptions related to each line item in the P/L statement.
Likewise modeling future B/S uses the assumptions related to each line item in the B/S.
Example of selected B/S items is given as follows:
Note: Remember to complete Balance Sheet modeling you have to link cash & cash equivalents in the balance sheet with the closing cash balance calculated in the cash flow statement.
Once future P/L & B/S is in place, modeling future cash flow statement (CFS) becomes a simple exercise because you have already categorized and linked the CFS with the P/L and B/S while modeling the historical cash flow statement. Now you just need to drag the formula till the required number of periods.
I hope you all will be able to do it correctly!!
In case you find any problem in modeling future P/L, B/S and CFS please write in our forum/blog, we will like to answer you queries.
2moro we will release filled template of projected future financial statements (P/L, B/S & CFS), so that you can check your progress.
Follows CFA Program Institute Prep Provider Guidelines