Financial modelling

Question 1

Operating costs

Answer 1

FC + VC

Question 2

VC

Answer 2

-Grow/decrease along with business activity
-% of revenues
-by projecting p x q

Question 3

Fc

Answer 3

Not directly related to revenues and may be assumed to grow at their own rate

Question 4

Economies of scale

Answer 4

Reached when average costs per unit fall and volume rises

Question 5

Break even point

Answer 5

Crucial to support the decision making process
Q= FC/(p-Vc)
Per unit

Question 6

COGS

Answer 6

Cost of goods sold

Question 7

1. Insignificant non operating item

Answer 7

Financing expenses/revenues

Question 8

2. Most insignificant non-operating item

Answer 8

Taxes

Question 9

3. Most insignificant non-operating item

Answer 9

Unusual charges/revenues

Question 10

To build a model you must:

Answer 10

1. Draw an industry overview with the help of the 5 forces framework
2. Draw the company profile, a BM

Question 11

KYC

Answer 11

Know your client

Question 12

Kym

Answer 12

Know your market:
Your product and company
Your competition