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Reviews:
"Business and Financial Models is a splendid introduction to the subject with lots of good examples which are easy to grasp and apply. It should improve the strategic financial understanding of managers of companies large and small. It deserves to be widely read."
Angus Cater, Chairman, SFS Group Limited
"A highly valuable, totally practical and fully integrated toolkit that makes essential reading for anyone looking to negotiate the turbulent economic climate."
Phil Ryan, MD, The Management Centre, Bangor Business School
Description:
Business models are a vital tool for business strategy and decision making. Used well, they enable companies to experiment with different tactics and scenarios in a safe, low-risk environment, to assess aims and opportunities, and to prioritize accordingly. With financial modelling, more abstract business models can be built into evaluation tools, translating ideas and scenarios into numbers ready for analysis.
Accompanied by a range of online templates, Business and Financial Models provides a practical and accessible introduction to these essential skills and practices, with guidance on:
• projections and scenarios
• visual thinking techniques
• modelling with Microsoft Excel
• building a business model
• budgets and balance sheets
• cash flow
• investment appraisal models
• business valuation
• modelling projects
• performance indicators
• sustainability
Templates to download, adapt and use in your own business are available from: www.koganpage. com/strategicsuccess
Contents:
Chapter 1: Stages in the development of a business and financial model • Scope • The fundamental question • A step-by-step approach • Skills required • Planning the model • Data quality • Tools • Summary
Chapter 2: Developing the research question and output definition • The basic question • Output definitions, examples, financial outputs • Summary
Chapter 3: Visual thinking to develop fundamental questions • Contributed by John Caswell and Sarah Gall • Challenging the traditional business model • New methods and approaches - a business model reflecting the world as it is today • Structured Visual Thinking (a trademark of Group Partners): principles for a dynamic world • An architectural approach to building a future • 4DTM approach • Summary
Chapter 4: Input definition • Basics of input definition • Important variables • Summary
Chapter 5: Scenario identification • Determining scenarios • Populating the spreadsheet with input values and formulae • Running different scenarios • Using Excel Scenario Manager for what-if analysis • Scenarios versus projections • Summary
Chapter 6: Building a simple model • Process • Example • Data extraction using Excel pivot tables • Some reminders of best practice • Reasons for failure of a model and how to avoid them • Summary
Chapter 7: Using charts • Excel charts • Using charts to help concentrate on the most important variables in an organization • Charts for break-even analysis • Chart tools • Presenting data and charts to communicate clearly • Using Excel pivot charts to show extracted data • Summary
Chapter 8: Modelling budgets • Planning and budgeting • Departmental budgets and variance analysis • Some key departmental budgets • Capital budgets • Summary
Chapter 9: Sales budgets • Sales budgets and forecasts are key to other budgets • Elements of a sales budget • Volume assumptions • Summary
Chapter 10: Production- material, labour and direct overhead budgets • Production budget • Direct materials budget • Direct labour budget • Direct overhead budget • Gross margin and profit budget • Margin and profit sensitivity • Departmental budget spreadsheet • Summary
Chapter 11: Fixed assets and depreciation • Accounting depreciation, straight line and reducing balance • Additions and disposals of assets • Tax depreciation (capital allowances in the UK) • Summary
Chapter 12: Managing and modelling cash flow and working capital • The cash flow cycle • Working capital ratio • Optimal stock levels • Debtors • Cash models • Cash budget • Summary
Chapter 13: Investment appraisal models • Relevant cash flow • Pay-back period • Return on capital • Accounting rate of return (ARR) • Discounted cash flow and net present value/internal rate of return • Capital rationing • Summary
Chapter 14: The cost of capital • The average and the marginal costs of capital • Balancing equity and external borrowing • Risk and the cost of capital • Methods of determining the cost of equity • Significance of the cost of capital • Summary
Chapter 15: Business valuation models • The value of a business and building value • Methods of valuing a business • Who can value a business and what information do they require? • Examples of valuation methods and their appropriateness to valuation reasons • Earnings-based valuations • Cash flow valuation models • Discounted cash flow (DCF) method of valuation • Summary
Chapter 16: Performance indicators • Dashboards • Key performance indicators • The integrated standard costing system • Activity-based costing (ABC) • Summary
Chapter 17: Modelling the company balance sheet, P&L and ratio analysis • Prepare an Excel model • Analysis and financial ratios • Ratio analysis • Summary
Chapter 18: Financial functions • Financial formulae and using Excel fx functions • Excel financial functions • Summary
Chapter 19: Building a business model • Modelling a start-up business • Opening balance sheet • Expected returns for risk - proprietors’ pay, bank interest • Forecast profit and loss statement and sales requirement • Required marketing and selling activity • Direct costs required • Building a model • Key indicators • Business plan • Summary
Chapter 20: Modelling projects • What is a project? • Critical path analysis (CPA) • CPA example • Risk and uncertainty • Gantt charts and resource planning • Modelling projects using Excel • Summary
Chapter 21: Integration, complexity and business models • The level of integration required • Data and systems integration • Cloud computing • Summary
Chapter 22: Business models for the green economy • Future challenges and opportunities • Production processes • Demand for greener products and services • Investor expectations • Resourcing • Effects of climate change and other factors • Supply chains • Social responsibility • Changing models • Modelling green issues • Summary
Appendix I Excel shortcut command
Appendix • Chart for business model build project
Appendix • Discounted cash flow tables • Index ISBN - 9780749468101
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Pages : 296
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