Financial Modeling and Valuation: A Practical Guide to Investment Banking and Private Equity by Paul Pignataro
PART One
Financial Statements
and Projections
Financial modeling is the fundamental building block of
analysis in investment banking. We will take a look at
Walmart and analyze its financial standing, building a
complete financial model as it would be done by Wall Street
analysts.
The goals of this section are:
1. Understanding financial statements
a. Concepts
b. Historical analysis
c. Making projections
d. Model flow between the statements
2. Ability to build a complete financial model of Walmart
It is recommended that a financial model be built in six
major components:
1. Income statement
2. Cash flow statement
3. Balance sheet
4. Depreciation schedule
5. Working capital
6. Debt schedule
The first three are the major statements: income
statement, cash flow statement, and balance sheet. The
latter three help support the flow and continuity of the first
three. It is also not uncommon to have even more
Financial Statements
and Projections
Financial modeling is the fundamental building block of
analysis in investment banking. We will take a look at
Walmart and analyze its financial standing, building a
complete financial model as it would be done by Wall Street
analysts.
The goals of this section are:
1. Understanding financial statements
a. Concepts
b. Historical analysis
c. Making projections
d. Model flow between the statements
2. Ability to build a complete financial model of Walmart
It is recommended that a financial model be built in six
major components:
1. Income statement
2. Cash flow statement
3. Balance sheet
4. Depreciation schedule
5. Working capital
6. Debt schedule
The first three are the major statements: income
statement, cash flow statement, and balance sheet. The
latter three help support the flow and continuity of the first
three. It is also not uncommon to have even more
supporting schedules depending on the required analysis.
Notice the first six tabs in the model template (“NYSF—
Walmart—Template.xls”). Each reflects the six major model
components. Please use the template and follow along as
we build the model together.
Notice the first six tabs in the model template (“NYSF—
Walmart—Template.xls”). Each reflects the six major model
components. Please use the template and follow along as
we build the model together.
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