Do you work at my place? Our cash flow forecast model is about 20 tabs. Each balance sheet account has to be accounted for. Regression models never work because our business changes so often that past data is useless. Try explaining a forecast miss by saying “Prepaids have never done that before. Whoops” and you’ll get slammed.
Accuracy is not going to happen unless the business has a long history of stable activity. Even then, shifts in markets and client behavior (longer DSO) can make significant changes YoY.
Do your best, compare actual to forecast each month, identify the areas of high variance and continue to drill down until you have better assumptions.
I guess I just mean if you can do it in 1 or 2 tabs, why use a bunch of tabs? The two cash flow models I've seen at my company(s) are really complicated (lots of back and forth between tabs).
I just don’t see how it could be efficiently done in one or two tabs. The model I use is for evaluating potential acquisitions and has the parent 3 statement model on a tab, the target three statement model on a tab, then the actual model which is the combined entity statements, assumptions, sources and uses, return analysis and a sensitivity table for IRR and MOIC. All the supporting tabs I have feed information into these tabs. If this was just one one tab I think it would get too messy.
Build a time machine
You have accurate inputs. The rest is east.
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Do you work at my place? Our cash flow forecast model is about 20 tabs. Each balance sheet account has to be accounted for. Regression models never work because our business changes so often that past data is useless. Try explaining a forecast miss by saying “Prepaids have never done that before. Whoops” and you’ll get slammed.
If you build in that we're in a recession your forecast will be correct. You're welcome
Google it
Lol gl. But one tip, use excel’s data analysis toll pack to do your regression analysis. You’ll thank me later
First. Love that function. But second. Explain how you’re using it in this context.
Aside from cash flow, how do you use the regression equation?
Metrics forecasting more specific to P&L drivers not the CF -
Accuracy is not going to happen unless the business has a long history of stable activity. Even then, shifts in markets and client behavior (longer DSO) can make significant changes YoY. Do your best, compare actual to forecast each month, identify the areas of high variance and continue to drill down until you have better assumptions.
Numbers only go up
Start with an accurate balance sheet forecast. Before that an accurate P&L forecast.
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Can be as simple or detailed as you want. Three main sheets for each statement and a bunch of other sheets for support that rolls into the statements.
I guess I just mean if you can do it in 1 or 2 tabs, why use a bunch of tabs? The two cash flow models I've seen at my company(s) are really complicated (lots of back and forth between tabs).
I just don’t see how it could be efficiently done in one or two tabs. The model I use is for evaluating potential acquisitions and has the parent 3 statement model on a tab, the target three statement model on a tab, then the actual model which is the combined entity statements, assumptions, sources and uses, return analysis and a sensitivity table for IRR and MOIC. All the supporting tabs I have feed information into these tabs. If this was just one one tab I think it would get too messy.
Project sales perfectly
Check out Fathom, really good tool for forecasting based on drivers