Quarterly forecasting updating revenue and expense models speed dating book lovers

Of that, we compute that XYZ Corp has approximately 11% market share (XYZ Books Sold of 2.85 million ÷ Total of Books Sold of 27 million).

Note that this share is different in different states—this may become important, especially if we find that expected growth rates differ by state. Once we understand the addressable market, we can now forecast the growth rate of the population, the percentage of people that are in college, the total number of textbooks each person in college buys, and the market share XYZ Corp has: Math Example: In Year 1, California grows population 3%, to 39.1 million × 15.8% college students × XYZ market share of 10% = 618,000 college students.


A financial model is built to study a company’s financial history and to use the information available (both past and present) to predict the company’s performance in the future.

Generally, a financial model is used to predict several key metrics of a company’s financial performance, with the later items being key metrics in valuing a business: In Chapter 4, Discounted Cash Flow, we walked you through the basic concepts in projecting Free Cash Flow.

In this module we will take a deeper look at each step in the process—but first, as a review, here are the primary steps involved in building a spreadsheet financial model for a company: It is important to leave the Interest Expense item for last.

Modeling using a top-down approach starts with the addressable market.

This is the entire market to which a company could potentially sell its goods or services. operates in California, Texas and Florida and sells college textbooks.Although companies change to some degree every year, you can still learn a lot about a company’s revenue growth profile, cost structure, margins, and earnings growth by analyzing its past performance.



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