Learn 3 things from Jason Hershman 🟭 | Chris Reilly (Financial Modeling Education) posted on the topic | LinkedIn (2024)

If you ever want to build a financial model from scratch...You'll need to learn how to build a balance sheet.Avoid these top 3 mistakes and your balance sheet is guaranteed to balance.

13

𝗧𝗼𝗽 𝟯 𝗥𝗲𝗮𝘀𝗼𝗻𝘀 𝗬𝗼𝘂𝗿 𝗕𝗮𝗹𝗮𝗻𝗰𝗲 𝗦𝗵𝗲𝗲𝘁 𝗗𝗼𝗲𝘀𝗻'𝘁 𝗕𝗮𝗹𝗮𝗻𝗰𝗲First, thanks tomy friend Jason Hershmanfor this post idea -- he mentioned it to me while working through a model and we both immediately agreed we see these 3 things all the time.𝟭. 𝗧𝗵𝗲 𝗡𝗲𝘁 𝗜𝗻𝗰𝗼𝗺𝗲 𝗼𝗻 𝘁𝗵𝗲 𝗣&𝗟 𝗱𝗼𝗲𝘀𝗻’𝘁 𝗺𝗮𝘁𝗰𝗵 𝘁𝗵𝗲 𝗰𝗵𝗮𝗻𝗴𝗲 𝗶𝗻 𝗥𝗲𝘁𝗮𝗶𝗻𝗲𝗱 𝗘𝗮𝗿𝗻𝗶𝗻𝗴𝘀 𝗼𝗻 𝘁𝗵𝗲 𝗕𝗮𝗹𝗮𝗻𝗰𝗲 𝗦𝗵𝗲𝗲𝘁Things to try:- Check that all entries have been correctly recorded in the P&L- Confirm the Balance Sheet is in Balance in Reporting System- Check if there were any Dividends distributed𝟮. 𝗧𝗵𝗲 𝗗𝗲𝗽𝗿𝗲𝗰𝗶𝗮𝘁𝗶𝗼𝗻 𝗘𝘅𝗽𝗲𝗻𝘀𝗲 𝗱𝗼𝗲𝘀𝗻’𝘁 𝗺𝗮𝘁𝗰𝗵 𝘁𝗵𝗲 𝗰𝗵𝗮𝗻𝗴𝗲 𝗶𝗻 𝗔𝗰𝗰𝘂𝗺𝘂𝗹𝗮𝘁𝗲𝗱 𝗗𝗲𝗽𝗿𝗲𝗰𝗶𝗮𝘁𝗶𝗼𝗻 𝗼𝗻 𝘁𝗵𝗲 𝗕𝗮𝗹𝗮𝗻𝗰𝗲 𝗦𝗵𝗲𝗲𝘁Things to try:- Check that all entries have been correctly recorded in the P&L- Check to see if any assets were sold or disposed𝟯. 𝗧𝗵𝗲 𝗦𝘁𝗮𝘁𝗲𝗺𝗲𝗻𝘁 𝗼𝗳 𝗖𝗮𝘀𝗵 𝗙𝗹𝗼𝘄𝘀 𝗶𝘀 𝗠𝗶𝘀𝘀𝗶𝗻𝗴 𝗮 𝗥𝗲𝗳𝗲𝗿𝗲𝗻𝗰𝗲 𝘁𝗼 𝘁𝗵𝗲 𝗕𝗮𝗹𝗮𝗻𝗰𝗲 𝗦𝗵𝗲𝗲𝘁Things to try:- Trace your SCF references one-by-one to ensure you’re capturing all Balance Sheet items- Use formulas to encapsulate changes in entire balance sheet instead of hand-picking references⏭️𝙉𝙚𝙭𝙩 𝙎𝙩𝙚𝙥𝙨:——————Be sure to followJason-- a fellowFTI Consultingalum and expert financial modeler, Jason is constantly publishing thought-provoking content in the world of FP&A and Financial Modeling.

177

15 Comments

𝗧𝗼𝗽 𝟯 𝗥𝗲𝗮𝘀𝗼𝗻𝘀 𝗬𝗼𝘂𝗿 𝗕𝗮𝗹𝗮𝗻𝗰𝗲 𝗦𝗵𝗲𝗲𝘁 𝗗𝗼𝗲𝘀𝗻'𝘁 𝗕𝗮𝗹𝗮𝗻𝗰𝗲———🎁𝗚𝗶𝘃𝗲𝗮𝘄𝗮𝘆: All my free Excel templates in one place 👉 https://bit.ly/3R6IvxK———First, thanks to my friend Jason Hershman of for this post idea -- he mentioned it to me while working through a model and we both immediately agreed we see these 3 things all the time.𝟭. 𝗧𝗵𝗲 𝗡𝗲𝘁 𝗜𝗻𝗰𝗼𝗺𝗲 𝗼𝗻 𝘁𝗵𝗲 𝗣&𝗟 𝗱𝗼𝗲𝘀𝗻’𝘁 𝗺𝗮𝘁𝗰𝗵 𝘁𝗵𝗲 𝗰𝗵𝗮𝗻𝗴𝗲 𝗶𝗻 𝗥𝗲𝘁𝗮𝗶𝗻𝗲𝗱 𝗘𝗮𝗿𝗻𝗶𝗻𝗴𝘀 𝗼𝗻 𝘁𝗵𝗲 𝗕𝗮𝗹𝗮𝗻𝗰𝗲 𝗦𝗵𝗲𝗲𝘁Things to try:- Check that all entries have been correctly recorded in the P&L- Confirm the Balance Sheet is in Balance in Reporting System- Check if there were any Dividends distributed𝟮. 𝗧𝗵𝗲 𝗗𝗲𝗽𝗿𝗲𝗰𝗶𝗮𝘁𝗶𝗼𝗻 𝗘𝘅𝗽𝗲𝗻𝘀𝗲 𝗱𝗼𝗲𝘀𝗻’𝘁 𝗺𝗮𝘁𝗰𝗵 𝘁𝗵𝗲 𝗰𝗵𝗮𝗻𝗴𝗲 𝗶𝗻 𝗔𝗰𝗰𝘂𝗺𝘂𝗹𝗮𝘁𝗲𝗱 𝗗𝗲𝗽𝗿𝗲𝗰𝗶𝗮𝘁𝗶𝗼𝗻 𝗼𝗻 𝘁𝗵𝗲 𝗕𝗮𝗹𝗮𝗻𝗰𝗲 𝗦𝗵𝗲𝗲𝘁Things to try:- Check that all entries have been correctly recorded in the P&L- Check to see if any assets were sold or disposed𝟯. 𝗧𝗵𝗲 𝗦𝘁𝗮𝘁𝗲𝗺𝗲𝗻𝘁 𝗼𝗳 𝗖𝗮𝘀𝗵 𝗙𝗹𝗼𝘄𝘀 𝗶𝘀 𝗠𝗶𝘀𝘀𝗶𝗻𝗴 𝗮 𝗥𝗲𝗳𝗲𝗿𝗲𝗻𝗰𝗲 𝘁𝗼 𝘁𝗵𝗲 𝗕𝗮𝗹𝗮𝗻𝗰𝗲 𝗦𝗵𝗲𝗲𝘁Things to try:- Trace your SCF references one-by-one to ensure you’re capturing all Balance Sheet items- Use formulas to encapsulate changes in entire balance sheet instead of hand-picking referencesHope this helps!—Chris

1

𝗧𝗼𝗽 𝟯 𝗥𝗲𝗮𝘀𝗼𝗻𝘀 𝗬𝗼𝘂𝗿 𝗕𝗮𝗹𝗮𝗻𝗰𝗲 𝗦𝗵𝗲𝗲𝘁 𝗗𝗼𝗲𝘀𝗻'𝘁 𝗕𝗮𝗹𝗮𝗻𝗰𝗲———🎁𝗚𝗶𝘃𝗲𝗮𝘄𝗮𝘆: All my free Excel templates in one place 👉 https://bit.ly/3R6IvxK———First, thanks to my friend Jason Hershman of for this post idea -- he mentioned it to me while working through a model and we both immediately agreed we see these 3 things all the time.𝟭. 𝗧𝗵𝗲 𝗡𝗲𝘁 𝗜𝗻𝗰𝗼𝗺𝗲 𝗼𝗻 𝘁𝗵𝗲 𝗣&𝗟 𝗱𝗼𝗲𝘀𝗻’𝘁 𝗺𝗮𝘁𝗰𝗵 𝘁𝗵𝗲 𝗰𝗵𝗮𝗻𝗴𝗲 𝗶𝗻 𝗥𝗲𝘁𝗮𝗶𝗻𝗲𝗱 𝗘𝗮𝗿𝗻𝗶𝗻𝗴𝘀 𝗼𝗻 𝘁𝗵𝗲 𝗕𝗮𝗹𝗮𝗻𝗰𝗲 𝗦𝗵𝗲𝗲𝘁Things to try:- Check that all entries have been correctly recorded in the P&L- Confirm the Balance Sheet is in Balance in Reporting System- Check if there were any Dividends distributed𝟮. 𝗧𝗵𝗲 𝗗𝗲𝗽𝗿𝗲𝗰𝗶𝗮𝘁𝗶𝗼𝗻 𝗘𝘅𝗽𝗲𝗻𝘀𝗲 𝗱𝗼𝗲𝘀𝗻’𝘁 𝗺𝗮𝘁𝗰𝗵 𝘁𝗵𝗲 𝗰𝗵𝗮𝗻𝗴𝗲 𝗶𝗻 𝗔𝗰𝗰𝘂𝗺𝘂𝗹𝗮𝘁𝗲𝗱 𝗗𝗲𝗽𝗿𝗲𝗰𝗶𝗮𝘁𝗶𝗼𝗻 𝗼𝗻 𝘁𝗵𝗲 𝗕𝗮𝗹𝗮𝗻𝗰𝗲 𝗦𝗵𝗲𝗲𝘁Things to try:- Check that all entries have been correctly recorded in the P&L- Check to see if any assets were sold or disposed𝟯. 𝗧𝗵𝗲 𝗦𝘁𝗮𝘁𝗲𝗺𝗲𝗻𝘁 𝗼𝗳 𝗖𝗮𝘀𝗵 𝗙𝗹𝗼𝘄𝘀 𝗶𝘀 𝗠𝗶𝘀𝘀𝗶𝗻𝗴 𝗮 𝗥𝗲𝗳𝗲𝗿𝗲𝗻𝗰𝗲 𝘁𝗼 𝘁𝗵𝗲 𝗕𝗮𝗹𝗮𝗻𝗰𝗲 𝗦𝗵𝗲𝗲𝘁Things to try:- Trace your SCF references one-by-one to ensure you’re capturing all Balance Sheet items- Use formulas to encapsulate changes in entire balance sheet instead of hand-picking referencesHope this helps!—Chris

129

6 Comments

WATCH HOW TO MAKE 3 STATEMENT MODELI've made this short video to explain how to build statements model from the starch. Simplified. Here is steps given in the video𝗔𝘀𝘀𝘂𝗺𝗽𝘁𝗶𝗼𝗻𝘀→ Set the assumptions→ Input value of assumptions𝗠𝗮𝗸𝗲 𝗹𝗮𝘆𝗼𝘂𝘁 𝗼𝗳 𝘆𝗼𝘂𝗿 𝗳𝗶𝗻𝗮𝗻𝗰𝗶𝗮𝗹 𝘀𝘁𝗮𝘁𝗲𝗺𝗲𝗻𝘁𝘀𝗜𝗻𝗰𝗼𝗺𝗲 𝘀𝘁𝗮𝘁𝗲𝗺𝗲𝗻𝘁→ Link the assumptions and value form the first sheet→ Input headcount forecast manually→ Input assumptions for variable costs→ Input assumptions for variable costs𝗕𝗮𝗹𝗮𝗻𝗰𝗲 𝘀𝗵𝗲𝗲𝘁→ Leave cash position empty for now→ Fill assumptions and calculate other positions→ Make plan of capital expenditures𝗖𝗮𝘀𝗵 𝗳𝗹𝗼𝘄 𝘀𝘁𝗮𝘁𝗲𝗺𝗲𝗻𝘁→ Input beginning cash position→ Add net income form balance sheets→ Add back depreciation as non cash item→ Add changes of current assets within operating cash flows from balance sheet→ Add changes of current liabilities within operating cash flows→ Input CAPEX from line given in balance sheet→ Input finance cash flow section𝗖𝗵𝗲𝗰𝗸 𝗼𝗳 𝗺𝗶𝗻𝗶𝗺𝘂𝗺 𝗰𝗮𝘀𝗵MOST IMPORANT CHECK!!𝗔𝘀𝘀𝗲𝘁𝘀 = 𝗟𝗶𝗮𝗯𝗶𝗹𝗶𝘁𝗶𝗲𝘀Not matching! Now add cash end form cash flow statement to the balance sheet.Aligned!!! 🔥_______________📌 See you in next video. Until the, practice my 𝗙𝗶𝗻𝗮𝗻𝗰𝗶𝗮𝗹 𝗠𝗼𝗱𝗲𝗹𝗶𝗻𝗴 𝗥𝗲𝘀𝗼𝘂𝗿𝗰𝗲𝘀.Get access here : https://lnkd.in/dZD5QNfhHave a nice Sunday!

542

36 Comments

Build a Depreciation Schedule in 90 seconds (with free template you can download 🔽)This is the classic "waterfall build" that you'll see in a lot of Three Statement Models.As your skills progress, you can actually stuff all of this into a single line using the OFFSET function.But, it's important to understand the underlying components of the schedule you're building first.So, I prefer to teach this "waterfall method," and then condense in a more robust FP&A model.(also, this method is easier to audit)———👋Hey, I'm Chris Reilly. If you've ever felt overwhelmed or frustrated by Financial Modeling (but know how important it is), then please follow my page. I can help you become a Financial Modeling expert without the high cost of traditional education.———👇Lastly, check the comments below to download the Depreciation template.

169

10 Comments

Build a Depreciation Schedule

1

eFinancialModels: Where accuracy meets efficiency. Discover why our customers trust us for their financial modeling needs. https://bit.ly/3v94tso#TrustedSolutions #ExpertModeling

1

Allow me to introduce you to one of my all-time favorite posts by Pieter Slegers – his compilation of 12 Financial Statement Cheat Sheets that have truly been a beacon of clarity in the often complex world of finance.1️⃣ 10 Profitability Ratios: https://lnkd.in/eBUyetjx2️⃣ 10 Cash Flow Ratios: https://lnkd.in/eEeqmgn73️⃣ 10 Balance Sheet Ratios: https://lnkd.in/ebGkp6Wr4️⃣ Profitability Analysis: https://lnkd.in/eze_rQPe5️⃣ Capital Allocation Metrics: https://lnkd.in/eUcVc4Qg6️⃣ Balance Sheet Analysis: https://lnkd.in/ePcYXQbw7️⃣ Capital Allocation 101: https://lnkd.in/eMWCV32B8️⃣ Financial Statements 101: https://lnkd.in/e8KuUk-e9️⃣ How to analyze a 10-K: https://lnkd.in/eKX2BTz9🔟 How to analyze a balance sheet: https://lnkd.in/eVExhHg411. How to analyze an income statement: https://lnkd.in/ebwNBE2812. How to analyze a Cash Flow Statement: https://lnkd.in/e3HcnSjxPersonally, these cheat sheets have been a game-changer for me, transforming what seemed like a daunting task into a manageable and comprehensible learning experience.Why keep this treasure trove of knowledge to myself when it has been such a boon to my financial understanding? Hence, I am thrilled to share this post far and wide, extending the wealth of knowledge that Pieter has so generously curated._________________Original Content Creator: Pieter Slegers (give him a follow)

8

5 Comments

Financial Modeling Best PracticesWhile preparing a financial model, these practices may help you to create a robust financial mode:1. Plan your Model - Define the objective of preparing your model2. Invest Time in Assumption - Growth drivers, expansion Plan, portfolio3. Use Separate Sheet for assumptions/inputs4. Decide vertical or horizontal6. Break down calculations into simple & logical steps7. Use clear labelling (esp. units of measurement)8. Include scenarios and sensitivity analysis 9. Built in error checks10.Test it!Lets Connect - Abdul Shakoor CMA, FFA-UK, LLBMention in comment other best practices you are following.#lexicon#financialmodeling#financial#modeling

31

1 Comment