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Cashflow modelling and forecasting techniques

Cash flow is the life-blood of all businesses. Financial modelling and cashflow forecasting is essential to identify potential shortfalls in cash balances, evaluate strategies, investments and critical business decisions. Take advantage of our tutorials and articles on cashflow modelling and powerful forecasting techniques and learn how to develop a structured approach to what-if analysis and make fewer errors while reducing the time required for quality assurance.

Jun 14, 2013

SMART Scenario Manager Tutorial

By Tim Heng

The Scenario Manager is one of the most powerful tools to be implemented into a model. The intention of the Scenario Manager is to combine numerous sensitivities into a single scenario, and derive key outputs relating to each scenario simultaneously. … read more

Sep 20, 2012

Working Capital – Trade Debtors and Trade Creditors

By Grace Utama

It is important to recognize the “Trade Debtors” and “Trade Creditors” in a cashflow model because it captures the cash cycle of the company, i.e. not all of the “Revenue” actually earned in a given period is received in the … read more

Mar 22, 2012

Organisational benefits of implementing best practice financial modelling

By Blake McNaughton

Financial modelling, unlike other areas of finance, is unregulated and lacks generally accepted practice guidelines. Combined with the purpose of most financial models this means that Model Risk is a very real concept. Accordingly, the majority of the world’s financial … read more

Oct 19, 2011

Cashflow Available for Debt Service (CFADS)

By Rickard Warnelid

CFADS introduction A project’s Cashflow Available for Debt Service (CFADS or CADS) is analysed by project lenders (senior debt banks) to determine debt sizes and repayment criteria. CFADS is calculated by netting out Revenue, Operating Expenditure (OpEx), Capital Expenditure (CapEx), … read more

May 10, 2011

Modelling Stockpiles in a Mining Project

By Nick Crawley

Introduction For many mining projects, the open pit/cut mining process often begins months or even years before the milling plant starts operating. The build up of stockpile requires careful treatment to ensure the right grade of the ore milled is … read more

Feb 14, 2011

Modelling Timing for Construction End

By Nick Crawley

Introduction This tutorial demonstrates the way to model the timing for construction in a project finance transaction, when it does not end in calendar period. Two methods are presented to suit project requirements. In a project finance transaction, it is … read more

Feb 10, 2011

An iterative approach to calculating the Internal Rate of Return (IRR)

By Bing Chien Quek

One function in Microsoft Excel that calculates the IRR is the IRR function. One of the disadvantages of the IRR function is that it assumes an annual cashflow and most financial model these days are generally monthly or quarterly. This … read more

Jan 31, 2011

Estimating Terminal Value

By Nick Crawley

Introduction The terminal value is the value of the project’s expected cash flow beyond the explicit forecast horizon. An estimate of terminal value is critical in financial modelling because it accounts for a large percentage of the project value in … read more

Dec 03, 2010

Calculating Tax Losses with an Expiration Period

By Nick Crawley

Introduction It is often the case that certain countries limit the length of time companies can carry their tax losses on the balance sheets. This is to restrict the company’s ability to minimise their tax liabilities by carrying tax losses … read more

Nov 29, 2010

Accounting for Finance Leases by the Lessee

By Nick Crawley

Introduction A Finance Lease or Capital Lease is often incorrectly disclosed and treated in the financial statements. This tutorial will focus on how to practically incorporate the principles of accounting for finance leases in the financial statement of the lessee. … read more

Dec 14, 2009

Multi-Asset Cashflow Modelling (1)

By Nick Crawley

Often project financing involves a structure to fund a multi-asset investment or projects of identical or very similar type. Let say the sponsor is considering a financing of ten (10) similar types of assets. All of the ten assets are … read more

Aug 02, 2009

Tutorial: Formula to calculate NPV in Excel

By Nick Crawley

This tutorial covers the formula for calculation of the Net Present Value (“NPV”) in Excel. It assumes the reader is familiar with the concept of net present values and concentrates on how to calculate an NPV in Excel and the … read more

Jul 14, 2009

Tracking of actual data

By Nick Crawley

How to transform an existing “Financial Close” model into a user friendly “Updatable for Actuals” model? This Tutorial and the accompanied workbook set out an approach for conversion of a typical project finance model and how to code-in the mechanics … read more

May 27, 2009

Straight line depreciation with reverse ticker

By Nick Crawley

In a project finance model, we often need to calculate depreciation of an asset which includes ongoing costs such as maintenance capital expenditure. This tutorial shows how to code the depreciation in one line as opposed to a traditional matrix … read more

Mar 23, 2009

Financial modelling of interest rate hedging

By Nick Crawley

Interest rate risk is where the risk that interest rates move and adversely affect the project economics. There are a range of approaches to interest rate risk management to protect your cost of funds on borrowings. This tutorial explains how … read more

Mar 23, 2009

MMRA – Major Maintenance Reserve Account

By Nick Crawley

When capital expenditure is lumpy and / or large it is common to need to consider and model a major maintenance reserve account (MMRA/c). This tutorial describes the function of MMRA and how to code and link it to the … read more

Feb 26, 2009

Excel data tables

By Nick Crawley

In Excel, you can create data tables to see how different input values affect the result of a formula without having to re-type or copy the formula for each input value. This adds a new dimension to Excel that is … read more

Sep 25, 2008

Features of a Cashflow Waterfall in Project Finance

By Nick Crawley

The Cashflow Waterfall ensures that each cashflow item occurs at the correct seniority to other items. This article outlines key categories of cashflow items and how to present Cashflow Waterfall in comparison to Cashflow Statement in a Project Finance Model. … read more

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