Contents -- ACKNOWLEDGEMENT -- INTRODUCTION -- The purpose of business and financial models -- Assumed knowledge -- About the author -- Online resources -- 1 STAGES IN THE DEVELOPMENT OF A BUSINESS AND FINANCIAL MODEL -- Scope -- The fundamental question -- A step-by-step approach -- Skills required -- Planning the model -- Data quality -- Tools -- Summary -- 2 DEVELOPING THE RESEARCH QUESTION AND OUTPUT DEFINITION -- The basic question -- Output definitions, examples, financial outputs -- Summary -- 3 VISUAL THINKING TO DEVELOP FUNDAMENTAL QUESTIONS -- Challenging the traditional business model -- New methods and approaches - a business model reflecting the world as it is today -- Structured Visual Thinking (a trademark of Group Partners): principles for a dynamic world -- An architectural approach to building a future -- 4D™ approach -- Summary -- 4 INPUT DEFINITION -- Basics of input definition -- Important variables -- Summary -- 5 SCENARIO IDENTIFICATION -- Determining scenarios -- Populating the spreadsheet with input values and formulae -- Running different scenarios -- Using Excel Scenario Manager for what-if analysis -- Scenarios versus projections -- Summary -- 6 BUILDING A SIMPLE MODEL -- Process -- Example -- Data extraction using Excel pivot tables -- Some reminders of best practice -- Reasons for failure of a model and how to avoid them -- Summary -- 7 USING CHARTS -- Excel charts -- Using charts to help concentrate on the most important variables in an organization -- Charts for break-even analysis -- Chart tools -- Presenting data and charts to communicate clearly -- Using Excel pivot charts to show extracted data -- Summary -- 8 MODELLING BUDGETS -- Planning and budgeting -- Departmental budgets and variance analysis -- Some key departmental budgets -- Capital budgets -- Summary -- 9 SALES BUDGETS.

Sales budgets and forecasts are key to other budgets -- Elements of a sales budget -- Volume assumptions -- Summary -- 10 PRODUCTION - MATERIAL, LABOUR AND DIRECT OVERHEAD BUDGETs -- Production budget -- Direct materials budget -- Direct labour budget -- Direct overhead budget -- Gross margin and profit budget -- Margin and profit sensitivity -- Departmental budget spreadsheet -- Summary -- 11 FIXED ASSETS AND DEPRECIATION -- Accounting depreciation, straight line and reducing balance -- Additions and disposals of assets -- Tax depreciation (capital allowances in the UK) -- Summary -- 12 MANAGING AND MODELLING CASH FLOW AND WORKING CAPITAL -- The cash flow cycle -- Working capital ratio -- Optimal stock levels -- Debtors -- Cash models -- Cash budget -- Summary -- 13 INVESTMENT APPRAISAL MODELS -- Relevant cash flow -- Pay-back period -- Return on capital -- Accounting rate of return (ARR) -- Discounted cash flow and net present value/internal rate of return -- Capital rationing -- Summary -- 14 THE COST OF CAPITAL -- The average and the marginal costs of capital -- Balancing equity and external borrowing -- Risk and the cost of capital -- Methods of determining the cost of equity -- Significance of the cost of capital -- Summary -- 15 BUSINESS VALUATION MODELS -- The value of a business and building value -- Methods of valuing a business -- Who can value a business and what information do they require? -- Examples of valuation methods and their appropriateness to valuation reasons -- Earnings-based valuations -- Cash flow valuation models -- Discounted cash flow (DCF) method of valuation -- Summary -- 16 PERFORMANCE INDICATORS -- Dashboards -- Key performance indicators (KPIs) -- The integrated standard costing system -- Activity-based costing (ABC) -- Summary -- 17 MODELLING THE COMPANY BALANCE SHEET, P&L AND RATIO ANALYSIS.

Prepare an Excel model -- Analysis and financial ratios -- Ratio analysis -- Summary -- 18 FINANCIAL FUNCTIONS -- Financial formulae and using Excel fx functions -- Excel financial functions -- Summary -- 19 BUILDING A BUSINESS MODEL -- Modelling a start-up business -- Opening balance sheet -- Expected returns for risk - proprietors' pay, bank interest -- Forecast profit and loss statement and sales requirement -- Required marketing and selling activity -- Direct costs required -- Building a model -- Key indicators -- Business plan -- Summary -- 20 MODELLING PROJECTS -- What is a project? -- Critical path analysis (CPA) -- CPA example -- Risk and uncertainty -- Gantt charts and resource planning -- Modelling projects using Excel -- Summary -- 21 INTEGRATION, COMPLEXITY AND BUSINESS MODELS -- The level of integration required -- Data and systems integration -- Cloud computing -- Summary -- 22 BUSINESS MODELS FOR THE GREEN ECONOMY -- Future challenges and opportunities -- Production processes -- Demand for greener products and services -- Investor expectations -- Resourcing -- Effects of climate change and other factors -- Supply chains -- Social responsibility -- Changing models -- Modelling green issues -- Summary -- Appendix 1 Excel shortcut commands -- Appendix 2 Chart for business model build project -- Appendix 3 Discounted cash flow tables -- Index.