The TACTIC Financial Model

We will understand the anatomy of a three-statement model and the best practices we will follow when creating one.

Think of it as a puzzle. If you master this well, you will have the layout of the puzzle ready and as you progress to more complex business structures or more advanced models, you will know exactly where each new piece will fit into your large puzzle.

Presentation of the Case Study we will use in this course.

This module is designed to guide you through the nuanced process of constructing revenue schedules, adapting to a variety of business models. By practicing with diverse scenarios, we'll gain a comprehensive understanding of how different revenue streams and business assumptions influence a company's financial projections, equipping you with the analytical tools necessary for accurate and dynamic financial planning in the business world.

Working capital, the difference between current assets and liabilities, is vital for daily company operations. It reflects a firm's ability to pay short-term obligations and fund operational needs. Positive working capital signifies financial health and operational efficiency, allowing for growth and stability. Conversely, negative working capital indicates potential liquidity challenges, necessitating careful management to ensure the company's ongoing viability and growth potential.

As we dive into the case study, we'll uncover how costs can be incurred and managed, from fixed and variable expenses to direct and indirect costs. By engaging with a range of examples, you'll develop a deep insight into how costs impact a company's financial health and how effective cost management can drive profitability.

In our Income Taxes module, we'll learn to calculate taxes from both accounting and government perspectives. We'll see how these figures can differ and explore tax deferral strategies to manage the discrepancy. This knowledge helps in planning financials and minimizing tax liabilities, a crucial skill for effective financial management and strategic planning.

In this module, we'll explore fixed assets—long-term investments like equipment and buildings—and how they depreciate over time. Understanding how to calculate and record these assets and their depreciation is key for any business, impacting profits and taxes. This knowledge is essential for accurate financial modeling and decision-making.

In our Equity module, we'll explore the intricacies of issuing and buying back shares, including both preferred and common types, and how dividends are paid out. This session is essential for understanding how companies adjust their equity structure and reward shareholders, impacting overall financial strategy and investor relations.

In the Debt Schedule module, we'll cover how to calculate revolving debt for immediate cash needs and delve into long-term debt amortization and net interest expenses. This knowledge is crucial for managing a company's financial stability and planning for future growth, helping to balance immediate liquidity needs with long-term financial health.

In the Scenario Building module, we'll learn to create and analyze different financial outcomes based on various assumptions. This technique helps in forecasting future financial health, preparing for uncertainties, and making informed decisions. By exploring best, worst, and most likely scenarios, we equip ourselves with strategies to navigate the unpredictable nature of business and finance.

In the Audit, Stress Test, and Error-Proofing module, we delve into ensuring the reliability and accuracy of our financial models. We'll cover techniques for auditing models for errors, conducting stress tests under various scenarios, and implementing strategies to proof against potential mistakes. This process is vital for building robust models that withstand scrutiny and unexpected financial conditions, providing confidence in the decisions based on these models.

In the Presenting Results module, we'll explore methods to present financial models, from succinct executive summaries to interactive dashboards. We'll guide you on choosing the right charts for every situation and touch upon additional analyses to deepen understanding of financial models, highlighting when they're necessary. This knowledge is key to effectively communicate financial insights, making complex data accessible and impactful for decision-making.

In this module, we'll explore how business and operational decisions and transactions impact financial statements. From day-to-day operations to strategic shifts, we'll see how these activities reflect in the balance sheet, income statement, and cash flow statement. Understanding this relationship is crucial for assessing financial health and guiding decision-making, providing a holistic view of how operational actions drive financial outcomes.