Financial Modelling Example Long Range Plan Financial Model
Long Range Plan Forecast Financial Model
This type of financial model supports a firm’s long term strategic plan.
Generally, the main financial model outputs are the standard financial statements:
- profit & loss (Income statement)
- balance sheet
- cashflow
The model will generally include static historical data and forecast data based on a number of market and key business drivers. Depending on the industry, the forecast years can range from 3 to 30 years.
In order to model the future years, the model will use a number of assumptions or key forecast drivers such as:
- macro - such as inflation, tax rates.
- market - size of market and potential growth in the market.
- company - projected volume of sales and value of sales, variable and fixed costs.
From the key assumptions, the future years are extrapolated and can be shown with the historical data (either on a pro-forma or as acquired basis). The model will generally include a facility to run different scenarios based on different business outlooks.
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