Financial forecasting model FAQs are below for the family of AFS 3-statement projection models, general financial reporting, and various other financial modeling topics:
General
Yes. Why? To tell an investor how his/her investment will be put to best use. More here.
A 3 Statement Model is recommended to completely capture the cash needs of the business. More here.
Yes, expect to use a PC to build your financial projection model. The AFS Models will run, but have not been tested on, a handheld device. However, due to the severe screen size limitations of a handheld device, quality model construction has rarely been completed on anything but a PC.
Nuts & Bolts
No. But there are some simple, important concepts you'll need to know in order to fully utilize any Financial Model. See Accounting Basics in the following FAQs for more information.
No. But you should have a basic understanding of what a spreadsheet is and how to use it.
A Statement of Cash Flows is one of the "3 Statements". It reports on the amount of cash generated from certain business activities. Cash is often called the lifeblood of a business. The Cash Flow Statement reports on which areas of the business are generating cash and which are consuming cash. More here (internal to site). Or here (external to site).
The "3 Statements" flow in a specific manner. In fact, the way in which they react with one another is determined/controlled by General Accepted Accounting Principles or GAAP. GAAP determines the extent to which the IS interacts with the BS and the CF. The AFS 3 Statement Model is "wired" to follow GAAP guidelines. More here.
Your Company's Value
Whether a startup or a large entity, a company's value is typically determined by profits to be generated in the future. Accordingly, a projection of the company's future performance is critical to determining its value. More here.
If an investor makes an investment in your company, the investor will demand an ownership percentage (in stock) in exchange for her investment. The percentage she receives is dependent on the value of the business. More here.
Most Financial Forecast Models include projections for a 3 to 7 year period. A 5 year period is most typical. More here.
Multiples are used to determine the value of a company based on an operating metric. For example, if the Sales Multiple is 1.5x, and annual sales of the company are $100, then the value of the company would be $150. More here.
AFS Products
There are three types of financial models offered. They all include the "pre-wired" 3 financial statements (IS, BS and CF) and they all range over a 5 year projection period. The difference is in the projection time element. The time element in one model type is annual, another is quarterly and another type is monthly. A comparison is ==> here. Additionally, on-line training is available.
The 3 financial statements (IS, BS and CF) are "pre-wired" together using operating totals. This "pre-wiring" is independent of any specific business. However, the details of the operating totals are unique to your business and must be supplied by the entrepreneur. For example, Net Income is "pre-wired" from the IS to the BS. However, the Revenues and Expenses which are used to compute Net Income, must be provided by the entrepreneur.
It is recommended that Microsoft Excel be used for use with the AFS financial models. All AFS financial models have been tested extensively on Excel. We have learned that some users encountered compatibility issues when trying to use the monthly AFS financial model on non-Microsoft spreadsheets.
All models come with 60 days of technical support via access to Support Content on this web-site. The Support Content region of the AFS web-site provides insight to resolve most questions which may come up while using the AFS models.
After the initial 60 period, access to Support Content is renewable on a monthly or annual basis.
In all modeling cases, technical support is available via email. We attempt to promptly respond to all technical support questions.
Yes. After the initial 60 day period with access to the Support Content, continued access can be extended via the purchase of an Extension Contract. Extension Contracts can be purchased on a monthly or annual basis here.