Financial Modelling Manual: A comprehensive but succinct step-by-step guide to building a financial forecast model in Excel by Aasha Shamsuddin

Author:Aasha Shamsuddin [Shamsuddin, Aasha]
Language: eng
Format: azw3, epub
Publisher: BG Consulting
Published: 2015-10-19T04:00:00+00:00

Now go to your cash flow statement and type in the section headings, ‘Operating cash flows’, ‘Investing cash flows’ and ‘Financing cash flows’, leaving a few blank rows between each. You can easily insert or delete extra rows if you need to later.

Go back to the balance sheet and look for the first labelled item. Type the corresponding label into the cash flow statement and build the formula to add or decrease the movement using the rules mentioned above. It is extremely important that the movement is shown correctly as positive or negative. Once the movement in the item has been included in the cash flow statement, you can delete the workings label for it in the balance sheet. Then go to the next labelled balance sheet item and repeat the same process.

The order of items in the model cash flow statement does not matter as long as you start with net income and make sure that the other items are all correctly allocated between operating, investing and financing.

When you reach the first balance sheet item marked as ‘OWC’, go to the operating working capital calculation sheet and reflect the movement in net operating working capital in the operating cash flow section of the cash flow statement.

Remember that net operating working capital is a use of funds, so any increase must be deducted in the cash flow statement.

As you are dealing with all operating working capital items in one step, you can now delete all ‘OWC’ labels from the balance sheet.

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