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Developing the Excel Model

A model for a business case built using Excel synthesizes concepts and methods that you have already learned about in this book: income statement formation (discussed in Chapter 1, “Working with Income Statements”), cash flow analysis (in Chapter 5, “Working Capital and Cash Flow Analysis”), budget planning (in Chapter 8, “Budgeting and Planning Cycle”), and forecasting (in Chapter 9, “Forecasting and Projections”).

The first step in developing the model is to create a pro forma income statement. The pro forma income statement takes into account the relevant benefits and costs involved in the proposed course of action.


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