Long-Term Financial Planning - Financial Planning Models - Components of a Financial Planning Model

4 important questions on Long-Term Financial Planning - Financial Planning Models - Components of a Financial Planning Model

What are the 3 components of a financial planning model?

1. Inputs
2. Planning model
3. Outputs

What does the element inputs consists of?

1. Current financial statement (balance sheet, statement of income, cash flow statement)
2. Key variables (such as sales or interest rates)

What does the element planning model consists of?

Equations specifying key relationships. In most of the models relationships are based on the revenues - percentage of sales models
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What does the element output consist of?

1. Projected/forecasted financial statements - pro formas (balance sheet, income statement, cash flow statement)
2. Financial ratios
3. Sources and uses of cash

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