|Description||This article demonstrates how you can easily plan for a specific financial model with Forwardly.|
|Objective||At the end of this article, you should be able to effectively create a projection and analyze how a financial model would affect your projected cash flow.|
|Estimated reading time||5-6 minutes|
With Fowardly, you easily plan and project a number of different scenarios, including how a financial model may affect your business's cash flow going forward.
Steps to Financial Modeling
- On the Cash Flow page, click on Plan a Scenario.
- Click on Plan a Project.
- Fill out the financial model details:
Select the base by clicking on the Choose the Base drop-down menu. Select either of the two following options:
- Sales to Expenses
- Adjust Sales
- Expenses to Sales
- Adjust Expenses
- Sales to Expenses
You can then adjust either the Sales or Expense projections by sliding the bar on the right-hand side as a percentage value of growth in those two specific areas. At the bottom, you will be able to select which months the financial modeling will affect.
Example: Financial Modelling
Now, let's walk through a practical example where a company is deciding whether or not to purchase an asset. Suppose you are a clothing and equipment resale business. With a recession looming, you expect sales to increase by 20% starting in March through December as consumers explore more cost-effective avenues to apparel purchases.
Tip: As you make changes, keep an eye on the summary area to see how each option changes the final result.
- Choose the Base: Sales to Expenses
- Adjust Sales: 20%
- Months Selected: Mar '23 to Dec '23
You can now assess what your net cash position will be after taking into account the sales increase, the increase in cost of gold sold, and your new project net profits.
Reminder: You can manually input the projected increase in costs as a result of the increase in sales by hitting the Explore button at the top right of the Financial Modeling table.