FAQs
Frequently Asked Questions (FAQs) below are about the family of 3-statement projection models for entrepreneurs available from AFS. Topics include: general financial reporting, product information and other financial modeling topics:
General
Should an Entrepreneur use a Financial Model?
Yes. Why? To tell an investor how his/her investment will be put to best use. More here.
What Model type is recommended by Anderson Financial Services?
A 3 Statement Model is recommended to completely capture the cash needs of the business. More here.
Must I use a PC to use the AFS Models?
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
Do I need to be an accountant to use a Financial Model?
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.
Do I need to be an Excel expert to use a Financial Model?
No. But you should have a basic understanding of what a spreadsheet is and how to use it.
Accounting Basics - What is an Income Statement?
Accounting Basics - What is a Balance Sheet?
Accounting Basics - What is a Cash Flow Statement?
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 this site). Or here (external to this site).
Accounting Basics - How Do the 3 Statements Flow Together?
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
How are projections and company value connected?
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.
Why do I care about company value when receiving an investment?
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.
Why is forecast horizon 5 years for most projections?
Most Financial Forecast Models include projections for a 3 to 7 year period. A 5 year period is most typical. More here.
What is a valuation multiple?
Valuation 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 = 1.5 x $100. More here.
AFS Products
What financial forecasting models are available from Anderson Financial Services (AFS)?
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.
How can a standard financial forecasting model work with the unique aspects of my business?
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.
Do the AFS financial forecasting models work on Google Sheets?
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.
Do AFS models come with technical support?
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.
Technical support is also available via email. We attempt to promptly respond to all technical support questions.
Can I extend technical support for all AFS models?
Yes. Technical support can be extended past the initial 60 day period by buying an Extension Contract. Extension Contracts offer continued access to the Support Content on this web site and can be purchased on a monthly or annual basis. More here.