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Financial Modeling in Excel

Financial Modeling in Excel. Day 2. Speed vs. Flexibility Tradeoff. What we’re making flexible: Long Term and Short Term Scooter Market Growth Our Market Share The time we need to capture market share Discount rate / Cost of Capital Anything else we have as an input

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Financial Modeling in Excel

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  1. Financial Modeling in Excel Day 2

  2. Speed vs. Flexibility Tradeoff • What we’re making flexible: • Long Term and Short Term Scooter Market Growth • Our Market Share • The time we need to capture market share • Discount rate / Cost of Capital • Anything else we have as an input • What we are not making flexible • Real Options (e.g. Option to abandon / expand) • Demand Curve / Price Sensitivity • Leverage (except through discount rate)

  3. Our Market Share Model • We are linking our sales to a percentage of the scooter market. • It might be reasonable to assume that it takes some time to generate market share Market Share Maximum Market Share Years Year_until_Max_MktShr

  4. Vlookup() & Hlookup() • These functions look up variable in a table, either horizontally or vertically. • This is a good way to avoid hard coding when inputs don’t correspond to a function you can calculate. • Our example – MACRS schedules

  5. Analysis The difference between A and B cases… • Sensitivity Analysis: • Allows us to examine the importance of individual assumptions • Scenario Analysis: • Allows us to examine important cases • E.g. best and worst case scenario

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