Financial Modelling Manual

How to forecast

Sales are generally forecast using a growth rate assumption. Some models contain detailed sales forecasts which are split out by business or geographical sector and each sector projected individually. It is also possible to separate sales growth into components of price growth and volume growth. Volume growth can also be separated into market growth and share of market growth, all of which can be forecast separately depending on how much detail is needed.

In the sample model for this manual, input cells have a grey background and blue and bold font whilst the formula cells have a white background and black font

It is common within models for hard coded numbers to be shown in blue font colour and formulas (calculated numbers) to be shown in black.

you must exclude any one-off and exceptional items using the information found in the Annual Report.

The cash flow statement in a model shows line by line detail for forecast numbers only.

Or more sophisticated if you use an IF statement

= IF (Total Assets = Total Liabilities,“OK”,Total Assets – Total Liabilities)