The financial model consists of three statements: the Income Statement, the Balance Sheet and the Cash Flow statement. See below.
You can choose between two formats: Model A and Model B. They differ in the format of the Income Statement and generally also the results because costs and inventory are valued differently.
Model A
The Income Statement reports separately
- the value of the inventory variance from the beginning of the year to the year-end. This value is based on direct costs only. Indirect costs such as overhead are not taken into account in inventory valuation
- the cost of purchases during the year, regardless of whether quantities have been sold
- indirect costs and other expenses incurred in the year
In this type of Income Statement costs and expenses are reported by their nature (purchases, personnel, labor..) as opposed to their function (sales, distribution..).
Model B
Appropriate for manufacturing businesses. The Income Statement reports the Cost of Sales. Specifically, it reports the cost of quantities sold. Costs are presented by their function as opposed to their nature.
Cost of sales is calculated by allocating to the sold quantities a portion of the overall production costs (both direct and indirect production costs). The remaining production costs, which are attributed to the unsold quantities, are valued as inventory and, eventually, expensed as inventory write-offs. Inventory is reported on the Balance Sheet statement, i.e. it is not part of the profit & losses of the year.
Only the valued items will be visible in your model
Income Statement Model A
| INCOME STATEMENT | YEAR 1 | YEAR 2 | YEAR 3 | YEAR 4 | YEAR 5 |
|---|---|---|---|---|---|
| Gross sales from production | |||||
| Gross sales from trade | |||||
| Sales of services | |||||
| Discounts and returns | |||||
| Hospitality sales | |||||
| Restaurant and Bar sales | |||||
| Royalty Income | |||||
| Other Income | |||||
| Change in inventory of finished products | |||||
| Change in inventory of trade products | |||||
| Change in inventory of materials and consumables | |||||
| Trade purchases | |||||
| Materials and consumables purchases | |||||
| Logistics and distribution | |||||
| Personnel costs | |||||
| Contract labor | |||||
| Royalty expense | |||||
| Rent and leases | |||||
| Accounting and fiscal services | |||||
| Legal services | |||||
| Office supplies | |||||
| Other administrative expenses | |||||
| Travel | |||||
| Repair & Maintenance | |||||
| Insurance | |||||
| Utilities | |||||
| Taxes other than income taxes | |||||
| Bank fees | |||||
| Gains (losses) on foreign exchange | |||||
| Miscellaneous expenses | |||||
| Marketing | |||||
| Advertising | |||||
| Promotion | |||||
| Research & Development | |||||
| Risks and charges | |||||
| Tangible assets not for production depreciation | |||||
| Tangible assets for production depreciation | |||||
| Intangible assets amortization | |||||
| EBIT | |||||
| Interest income | |||||
| Other financial income | |||||
| Interest expense | |||||
| Other financial expenses | |||||
| Income taxes | |||||
| NET INCOME (LOSS) |
Income Statement Model B
| INCOME STATEMENT | YEAR 1 | YEAR 2 | YEAR 3 | YEAR 4 | YEAR 5 |
|---|---|---|---|---|---|
| Gross sales from production | |||||
| Gross sales from trade | |||||
| Sales of services | |||||
| Discounts and returns | |||||
| Hospitality sales | |||||
| Restaurant and Bar sales | |||||
| Royalty Income | |||||
| Cost of sales | |||||
| Other Income | |||||
| Distribution | |||||
| Sales personnel cost | |||||
| Marketing | |||||
| Advertising | |||||
| Promotion | |||||
| Administrative and other personnel cost | |||||
| Accounting and fiscal services | |||||
| Legal services | |||||
| Office supplies | |||||
| Other administrative expenses | |||||
| Research & Development | |||||
| Risks and charges | |||||
| EBIT | |||||
| Interest income | |||||
| Other financial income | |||||
| Interest expense | |||||
| Other financial expenses | |||||
| Income taxes | |||||
| NET INCOME (LOSS) |
Balance Sheet Model A and B
| BALANCE SHEET | YEAR 1 | YEAR 2 | YEAR 3 | YEAR 4 | YEAR 5 |
|---|---|---|---|---|---|
| Cash availability (deficit) | |||||
| Finished goods inventory | |||||
| Materials inventory | |||||
| Trade and other receivables | |||||
| VAT receivable (payable) | |||||
| Prepayments | |||||
| Goodwill | |||||
| Incorporation charges | |||||
| Trademark | |||||
| Website development | |||||
| IT system | |||||
| Other software | |||||
| Patents | |||||
| Other intangible assets | |||||
| Intangible assets accumulated amortization | |||||
| Land | |||||
| Buildings | |||||
| Other owned property for business | |||||
| Machinery and equipment | |||||
| Furniture and fixtures | |||||
| Hardware | |||||
| Company vehicles | |||||
| Other tangible assets | |||||
| Tangible assets accumulated depreciation | |||||
| Deferred taxes from NOL | |||||
| TOTAL ASSETS | |||||
| Trade and other payables | |||||
| Provisions | |||||
| Borrowings | |||||
| Capital and reserves | |||||
| Retained earnings including current year result | |||||
| TOTAL LIABILITIES AND EQUITY |
Cash Flow Statement Model A and B
| CASH FLOW STATEMENT | YEAR 1 | YEAR 2 | YEAR 3 | YEAR 4 | YEAR 5 |
|---|---|---|---|---|---|
| NET INCOME (LOSS) | |||||
| Income Taxes | |||||
| Financial income | |||||
| Financial expenses | |||||
| Changes in provisions | |||||
| Tangible assets for production depreciation | |||||
| Tangible assets not for production depreciation | |||||
| Intangible assets amortization | |||||
| Changes in Net Working Capital | |||||
| CASH FLOW FROM OPERATING ACTIVITIES | |||||
| Changes in tangible assets investments | |||||
| Changes in intangible assets investments | |||||
| Changes in financing | |||||
| Changes in capital and reserves | |||||
| Financial income received | |||||
| Financial expenses paid | |||||
| FREE CASH FLOW TO EQUITY | |||||
| DISCOUNTED CASH FLOW |