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Free Financial Modeling Training Courses

Financial Modeling training courses are all around the web and there has been lot written
about learning Financial Modeling, however, most of the financial modeling courses are exactly
the same. This goes beyond the usual gibberish and explore practical Financial Modeling as used
by Investment Bankers and Research Analysts.
In this Free Online Financial Modeling Training Course, I will take an example of Colgate
Palmolive and will prepare a full integrated financial model from scratch.
This Financial Modeling Course Tutorial guide is over 6000 words and took me 3 weeks to
complete. Save this page for future reference and dont forget to share it
Financial Modeling TrainingRead

me First
Step 1Download Colgate Financial Model Template. You will be using this template for the

Step 2Please note you will get two templates1)

Unsolved Colgate Palmolive Financial
Model 2) Solved Colgate Palmolive Financial Model
Step 3- You will be working on the Unsolved Colgate Palmolive Financial Model Template.
Follow the step by step Financial modeling Training instructions to prepare a fully integrated
financial model.
Step 4Happy

In addition to financial modeling course, you can also take advantage of this Free Investment
Banking Course.
I have made an easy to navigate table of contents for you.
What is Financial Modeling?
How to build a financial model?

Financial ModelHistorical

# 2Ratio

Analysis of Colgate Palmolive


the Income Statement
#4- Working Capital Schedule



Long Term Schedule

the Income Statement

Equity Schedule

Outstanding Schedule

the Cash Flow Statements
#12- Debt and Interest Schedule Recommended
Financial Modeling Course
Free Financial Models

What is Financial Modeling?

Wikipedia defines Financial Modeling as follows
Financial modeling is the task of building an abstract representation (a model) of a real world
financial situation. This is a mathematical model designed to represent (a simplified version of)
the performance of a financial asset or portfolio of a business, project, or any other investment.
Financial modeling is a general term that means different things to different users; the reference
usually relates either to accounting and corporate finance applications, or to quantitative finance
In simple terms, financial modeling means forecasting the future of the company or an asset by
way of an Excel Model that is easy to understand and perform scenario analysis. In the context of
our discussion here, we will discuss Financial Modeling with respect to the forecasting of the
future financials of the company. This free financial modeling training course will help you
forecast the financial statements of the company i.e. Income Statement, Balance Sheet and Cash
Flows. The excel model is also known as an Integrated Financial Statements Model.
How to build a financial model?

Now that we know what Financial Modeling is, let us look at how a financial model is build
from scrath. This detailed free financial modeling training course will provide you with a step by
step guide to create a financial model. The primary approach taken in this financial modeling
course isModular. Modular approach essentially means that we build core statements like
Income Statement, Balance Sheet and Cash Flows using different modules/schedules. The key
focus is to prepare each statement step by step and connect all the supporting schedules to the
core statements on completion. I can understand that this may not be clear as of now, however,
you will realize that this is very easy as we move forward. You can see below various Financial
Modeling Schedules / Modules
Please note the following
The core statements are the Income Statement, Balance Sheet and Cash Flows.
The additional schedules are the depreciation schedule, working capital schedule, intangibles
schedule, shareholders equity schedule, other long term items schedule, debt schedule etc.
The additional schedules are linked to the core statements upon their completion
In this financial modeling course, we will build a step by step integrated financial model of
Colgate Palmolive from scratch.


Financial ModelHistoricals

Step 1ADownload

Colgates 10K Reports
Financial models are prepared in Excel and the first steps starts with knowing how the industry
has been doing in the past years. Understanding the past can provide us valuable insights related
to the future of the company. Therefore the first step is to download all the financials of the
company and populate the same in an excel sheet. For Colgate Palmolive, you can download the
annual reports of Colgate Palmolive from their Investor Relation Section.

Once you click on Annual report, you will find the window as shown below

Step 1BCreate

the Historical Financial Statements Worksheet
If you download 10K of 2013, you will note that only two years of financial statements data is
available. However, for the purpose of Financial Modeling, the recommended dataset is to have
last 5 years of financial statements. Please download the last 3 years of annual report and
populate the historical.
Many a times, this tasks seems too boring and tedious as it may take lot of time and energy to
format and put the excel in the desired format.
However, one should not forget that this is the work that you are required to do only once for
each company and also, populating the historicals helps an analyst understand the trends and
changes that were made in the financial statements.
So please do not skip this, download the data and populate the data (even if you feel that this is
donkeys work

If you wish to skip this step, you can directly download Colgate Palmolive Historical Model
Colgate Income Statement with historical populated
Colgate Balance Sheet Historical Data
# 2Ratio

Analysis of Colgate Palmolive
A key to learning Financial Modeling is to be able to perform fundamental analysis. If
fundamental analysis or Ratio Analysis is something new for you, I recommend that you read a
bit on the internet. I intend to take an indepth ratio analysis in one of my upcoming posts,
however, here is a quick snapshot of the Colgate Palmolive ratios

Step 2AVertical

Analysis of Colgate
On the income statement, vertical analysis is a universal tool for measuring the firms relative
performance from year to year in terms of cost and profitability. It should always be included as
part of any financial analysis. Here, percentages are computed in relation to net sales which are
considered to be 100%. This vertical analysis effort in the income statement is often referred to
as margin analysis, since it yields the different margins in relation to sales.
Vertical Analysis Results
Gross Profit Margin has increased by 240 basis points from 56.2% in 2007 to 58.6% in 2013.
This is primarily due to decreased Cost of Sales
Operating Profit or EBIT has also shown improved margins thereby increasing from 19.7% in
2007 to 22.4% in 2012 (an increase of 70 basis points). This was due to decreased Selling
general and administrative costs. However, note that the EBIT margins reduced in 2013 to 20.4%
due to increase Other expenses
Net Profit Margin increased from 12.6% in 2007 to 14.5% in 2012. However, Net Profit
Margin in 2013 decreased to 12.9%, primarily due to increased other expenses.
Earnings Per share has steadily increased from FY2007 until FY2012. However, there was a
slight dip in the EPS of FY2013
Also, note that the Depreciation and Amortization is separately provided in the Income
Statement. It is included in the Cost of Sales
Step 2BHorizontal

Analysis of Colgate
Horizontal analysis is a technique used to evaluate trends over time by computing percentage
increases or decreases relative to a base year. It provides an analytical link between accounts
calculated at different dates using currency with different purchasing powers. In effect, this
analysis indexes the accounts and compares the evolution of these over time. As with the vertical
analysis methodology, issues will surface that need to be investigated and complemented with
other financial analysis techniques. The focus is to look for symptoms of problems that can be
diagnosed using additional techniques. Let us look at the Horizontal analysis of Colgate
Horizontal Analysis Results
We see that the Net Sales has increased by 2.0% in 2013.

Also note the trend in Cost of Sales, we see that they have not grown in the same proportion has
These observations are extremely handy while we do financial modeling
Step 2CLiquidity

Ratios of Colgate
Liquidity ratios measure the relationship of the more liquid assets of an enterprise (the ones
most easily convertible to cash) to current liabilities. The most common liquidity ratios are:
Current ratio Acid test (or quick asset) ratio Cash Ratios
Turnover Ratios like Receivables turnover, Inventory turnover and Payables Turnover
Key Highlights of Liquidity Ratios
Current Ratio of Colgate is greater than 1.0 for all the years. This implies that current assets
are greater than current liabilities and maybe Colgate has sufficient liquidity
Quick Ratio of Colgate is in the range of 0.60.7, this means that Colgates Cash and
Marketable securities can pay for as much as 70% of current liabilities. This looks like a
reasonable situation to be in for Colgate.
Cash Collection Cycle has decreased from 43 days in 2009 to 39 days in 2013. This is
primarily due to the reduction in receivables collection period.
Step 2DOperating

Profitability Ratios of Colgate
Profitability ratios measure a companys ability to generate earnings relative to sales, assets and
Key HighlightsProfitability

Ratios of Colgate
As we can see from the above table, Colgate has an ROE of closer to 100%, which implies great
returns to the Equity holders.
Step 2ERisk

Analysis of Colgate
Through Risk Analysis, we try to gauge whether the companys will be able to pay its short and
long term obligtations (debt). We calculate leverage ratios that focu on the sufficiency of assets
or generation from assets. Ratios that are looked at are
Debt to Equity Ratio
Debt ratio
Interest Coverage Ratio
Debt to Equity Ratio has steadily increased to a higher level of 2.23x. This signifies increased
Financial Leverage and risks in the market
However, the Interest Coverage Ratio is very high signifying less risk of Interest Payment

and Projecting the Income Statement
The very first step in the Income Statement is to model the Sales or Revenue items.
Step 3ARevenues

For most companies revenues are a fundamental driver of economic performance. A well
designed and logical revenue model reflecting accurately the type and amounts of revenue flows
is extremely important. There are as many ways to design a revenue schedule as there are
businesses. Some common types include:
Sales Growth: Sales growth assumption in each period defines the change from the previous
period. This is simple and commonly used method, but offers no insights into the components or
dynamics of growth.
Inflationary and Volume/ Mix effects: Instead of a simple growth assumption, a price
inflation factor and a volume factor are used. This useful approach allows modeling of fixed and
variable costs in multi product companies and takes into account price vs volume movements.
Unit Volume, Change in Volume, Average Price and Change in Price: This method is
appropriate for businesses which have simple product mix; it permits analysis of the impact of
several key variables.
Dollar Market Size and Growth: Market Share and Change in ShareUseful

for cases where
information is available on market dynamics and where these assumptions are likely to be
fundamental to a decision. For Example: Telecom industry
Unit Market Size and Growth: This is more detailed than the preceding case and is useful
when pricing in the market is a key variable. (For a company with a price-discounting strategy,
for example, or a best of breed premium priced niche player) e.g. Luxury car market

Volume Capacity, Capacity Utilization and Average Price: These assumptions can be
important for businesses where production capacity is important to the decision. (In the purchase
of additional capacity, for example, or to determine whether expansion would require new
Product Availability and Pricing
Revenue driven by investment in capital, marketing or R&D
Revenue based on installed base (continuing sales of parts, disposables, service and add-ons
etc). Examples include classic razor-blade businesses and businesses like computers where sales
of service, software and upgrades are important. Modeling the installed base is key (new
additions to the base, attrition in the base, continuing revenues per customer etc).
Employee based: For example, revenues of professional services firms or sales-based firms
such as brokers. Modeling should focus on net staffing, revenue per employee (often based on
billable hours). More detailed models will include seniority and other factors affecting pricing.
Store, facility or Square footage based: Retail companies are often modeled based on the
basis of stores (old stores plus new stores in each year) and revenue per store.
Occupancy-factor based: This approach is applicable to airlines, hotels, movie theatres and
other businesses with low marginal costs.
Projecting Colgate Revenues
Let us now look at Colgate 10K 2013 report. We note that in the income statement, Colgate has
not provided segmental information, however, as an additional information, Colgate has
provided some details of segments on Page 87

201310K, Page 86 Since, we do not have any further information about the
segments, we will project the future sales of Colgate on the basis of this available data. We will
use the sales growth approach across segments to derive the forecasts. Please see the below
picture. We have calculated year-over-year growth rate for each segment.
Now we can assume a sales growth percentage based on the historical trends and project the
revenues under each segment. Total Net sales is the sum total of Oral, Personal & Home
Careand Pet Nutrition Segment.
Step 3BCosts

Percentage of Revenues: Simple but offers no insight into any leverage (economy of scale or
fixed cost burden
Costs other than depreciation as a percent of revenues and depreciation from a separate
schedule: This approach is really the minimum acceptable in most cases, and permits only partial
analysis of operating leverage.
Variable costs based on revenue or volume, fixed costs based on historical trends and
depreciation from a separate schedule: This approach is the minimum necessary for sensitivity
analysis of profitability based on multiple revenue scenarios
Cost Projections for Colgate
For projecting the cost, the vertical analysis done earlier will be helpful. Let us have a relook at
the vertical analysis
Since we have already forecasted Sales, all the other costs are some margins of this Sales.
The approach is to take the guidelines from the historical cost and expense margins and then
forecast the future margin.
For example, Cost of Sales has been in the range of 41%-42% for the past 5 years. We can look
at forecasting the margins on this basis.
Likewise, Selling, General & Administrative Expenses have been historically in the range of
34%-36%. We can assume future SG&A expense margin on this basis. Likewise, we can go on
for other set of expenses.
Using the above margins, we can find the actual values by back calculations.
For calculating the provision for taxes, we use the Effective Tax Rate assumption
Also, note that we do not complete the Interest Expense (Income) row as we will have a
relook a the Income Statement at a later stage.
Interest Expense and Interest Income is covered in the Debt Schedule.
We have also not calculated Depreciation and Amortization which has already been included in
the Cost of Sales
This completes the Income Statement (atleast for the time being!)
#4- Working Capital Schedule
Now that we have completed the Income statement, the next step in this Financial Modeling
training course is to look at the Working Capital ScheduleBelow

are the steps that are to be
followed for Working Capital Schedule
Step 4ALink

the Net Sales and Cost of Sales
Step 4BReference

the Balance Sheet Data related to working capital
Reference the past data from the balance sheet
Calculate net working capital
Arrive at increase/ decrease in working capital
Note that we have not included short term debt and cash and cash equivalents in the working
capital. We will deal with debt and cash separately.
Step 4CCalculate

the Turnover Ratios
Calculate historical ratios and percentages
Use the ending or average balance
Both are acceptable as long consistency is maintained
Step 4DPopulate

the assumptions for future working capital items
Certain items without an obvious driver are usually assumed at constant amounts
Ensure assumptions are reasonable and in line with the business
Step 4EProject

the future working capital balances
Step 4FCalculate

the changes in Working Capital
Arrive at Cash Flows based on individual line items
Ensure signs are accurate!
Step 4GLink

up the forecasted Working Capital to the Balance Sheet
Step 4HLink

Working Capital to the Cash Flow Statement

With the completion of the working capital schedule, the next step in this Financial Modeling
Training Course is the project the capital expenditure requirements of Colgate and project the
Depreciation and Assets figures.
Colgate 201310K, Page 49

Depreciation and Amortization is not provided as a separate line item, however it is included in
the cost of sales
In such cases, please have a look at the Cash flow statements where you will find the
Depreciation and Amortization Expense Also note that the below figures are 1) Depreciation 2)
amortization. So what is the depreciation number?
Ending Balance for PPE = Beginning balance + CapexDepreciationAdjustment

for Asset
Sales (BASE equation)
Step 5ALink

the Net Sales figures in the Depreciation Schedule
Set up the line items
Reference Net Sales
Input past capital expenditures
Arrive at Capex as a % of Net Sales
Step 5BForecast

the Capital Expenditure Items
In order to forecast the Captial expenditure, there are various approaches. One common
approach is to look at the Press Releases, Management Projections, Management Discussion and
Analysis sections to understand the companys view on future capital expenditure
If the company has provided guidance on future capital expenditure, then we can take those
numbers directly.
However, if the capex numbers are not directly available, then we can calculate it crudely using
Capex as % of Sales (as done below)
Use your judgment based on industry knowledge and other reasonable drivers
Step 5C- Reference Past Information

We will use Ending Balance for PPE = Beginning balance + CapexDepreciation

Adjustment for Asset Sales (BASE equation)
It is very difficult to reconcile past Property Plant and Equipment (PPE) data due to
restatements, asset sales etc
It is therefore recommended not to reconcile the past PPE as it may lead to some confusions.
Depreciation Policy of Colgate
We note that Colgate has not explicitly provided detailed breakup of the Assets. They have
rather clubbed all assets into Land, Building, Machinery and other equipments
Also, useful lives for machinery and equipment is provided in range. In this case, we will have
to do some guesswork to come to the average useful life left for the assets
Also, guidance for useful life is not provided for Other Equipments. We will have to estimate
the useful life for other Equipments
Colgate 201310K, Page 55
Below is the breakup of 2012 and 2013 Property, Plant and Equipment Details
Colgate 201310K, Page 91
Step 5DEstimate

the breakup of Property Plant and Equipment (PPE)
First find the Asset weights of the Current PPE (2013)
We will assume that these asset weights of 2013 PPE will continue going forward
We use this asset weights to calculate the breakup of estimated Capital Expenditure
Step 5EEstimate

the Depreciation of Assets

Please note that we do not calculate depreciation of Land as land is not a depreciable asset
For estimating depreciation from Building improvements, we first make use of the below
Depreciation here is divided into two parts1)depreciation

from the Building Improvements
Asset already listed on the balance Sheet 2) depreciation from the future Building improvements
For calculating the depreciation from building improvements listed on the asset, we use the
simple Straight Line Method of depreciation
For calculating future depreciation, we first transpose the Capex using the TRANSPOSE
We calculate the depreciation from asset contribution from each year
Also, the first year depreciation is divided by 2 as we assume the mid year convention for asset
Total Depreciation of Building Improvement = depreciation from the Building Improvements
Asset already listed on the balance Sheet + depreciation from the future Building improvements
The above process for estimating depreciation is used to calculate the depreciation of 1)
Manfacturing Equipment & Machinery and 2) other Equipments as shown below.
Other Equipments
Total Depreciation of Colgate = Depreciation (Building Improvements) + Depreciation
(Machinery & Equipments) + Depreciation (other equipments)
Once we have found out the total depreciation figures, we can put that in the BASE equation as
show below

With this we get the Ending Net PP&E figures for each of the years
Step 5FLink

the Net PP&E to the Balance Sheet

The next step in this Free Financial Modeling Training Course is to forecast the Amortization.
We have two broad categories to consider here1)
Goodwill and 2) Other Intangibles.
Step 6AForecasting

Colgate 201310K, Page 61
Goodwill comes on the balance sheet when a company acquires another company. It is
normally very difficult to project the Goodwill for future years.
Goodwill is however, subject to impairment tests annually which is performed by the company
itself. Analysts are in no position to perform such tests and prepare estimates of impairments
Most analysts dont project goodwill, they just keep this as constant and this is what we will
also do in our case.
Step 6BForecasting

Other Intangible Assets
As noted in Colgates 10K Report, majority of the finite life intangible is related to the Sanex
Additions to Intangibles are also very difficult to project
Colgates 10K report provides us with the details of next 5 years of amortization expense.
We will use these estimates in our Financial Model
Colgate 201310K, Page 61
Step 6CEnding

net intangibles are linked to the Other Intangible Assets
Step 6Dlink

Depreciation and Amortization to Cash Flow Statements
Step 6ELink

Capex & Addition to Intangibles to Cash flow statements

Long Term Schedule
The next step in this Financial Modeling Training course is to prepare the Other Long Term
Schedule. This is the schedule that we prepare for the left overs that do not have specific
drivers for forecasting. In case of Colgate, the other Long Term Items (left overs) were Deferred
Income Taxes (liability and assets), Other assets and other liabilities.
Step 7AReference

the historical data from the Balance Sheet
Also calculate the changes in these items.
Step 7BForcast

the Long Term Assets and Liabilities
Keep the Long Term items constant for projected years in case of no visible drivers
Link the forecasted long term items to the Balance Sheet as shown below
Step 7CReference

Other Long Term Items to the Balance Sheet
Step 7DLink

the long term items to Cash Flow Statement
Please note that if we have kept the long term assets and liabilities as constant, then the change
that flow to the cash flow statement would be zero.

the Income Statement
Before we move any further, we will actually go back and relook at the Income Statement
Populate the historical basic weighted average shares and diluted weighted average number of
These figures are available in Colgates 10K report
Step 8AReference

the basic and diluted shares
At this stage, assume that the future number of basic and diluted shares will remain the same as
they were in 2013.
Step 8BCalculate

Basic and Diluted earnings per share
With this we are ready to move to our next schedule i.e. Shareholders Equity Schedule.

Equity Schedule
The next step in this Financial Modeling Training Course is to look at the Shareholders Equity
Schedule. The primary objective of this schedule is to project equity related items like
Shareholders Equity, Dividends, Share Repurchase, Option Proceeds etc.

Colgates 10K report provides us with the details of common stock and treasury stock activities
in the past years as shown below
Colgate 201310K, Page 68
Step 9AShare

Repurchase: Populate the historical numbers
Historically, Colgate have bought back shares as we can see the schedule above.
Populate the Colgates shares repurchase (millions) in the excel sheet.
Link the historical EPS (diluted) from the Income Statement
Historical Amount Repurchased should be referenced from the cash flow statements
Step 9BShare

Repurchase: Calculate the PE multiple (EPS multiple)
Calculate the implied average price at which Colgate has done share repurchase historically.
This is calculated as Amount Repurchased / Number of shares
Calculate the PE multiple = Implied Share Price / EPS
Step 9CShare

Repurchase: Finding Colgates Share Repurchased
Colgate has not made any official announcement of how many shares they intend to buyback The
only information that their 10K report shares is that they have authorized a buy back of upto 50
million shares.
Colgate 201310K, Page 35
In order to find the number of shares bought back, we need to assume the Share Repurchase
Amount. Based on the historical repurchase amount, I have taken this number as $1,500 million
for all the future years.

In order to find the number of shares repurchased, we need the projected implied share price of
the potential buy back.
Implied share price = assumed PE multiple x EPS
Future buy back PE multiple can be assume on the basis of historical trends. We note that
Colgate has bought back shares at an average PE range of 17x25x

Below is the snapshot from Reuters that helps us validate PE range for Colgate
In our case, I have assumed that all future buybacks of Colgate will be at a PE multiple of 19x.
Using the PE of 19x, we can find the implied price = EPS x 19
Now that we have found the implied price, we can find the number of shares repurchased = $
amount used for repurchase / implied price

Step 9DStock

Options: Populate Historical Data
From the summary of common stock and shareholders equity, we know the number of options
exercised each year.
In addition, we also have the Option Proceeds from the cash flow statements (approx)
With this, we should be able to find the effective strike price
Colgate 201310K, Page 53 Also, note that the stock options have contractual terms of six years
and vest over three years.
Colgate 201310K, Page 69 With this data, we fill up the Options data as per below
We also note that the weighted average strike price of stock options for 2013 was $42 and the
number of options exercisable were 24.151 million
Colgate 201310K, Page 70
Step 9EStock

Options: Find the Option Proceeds
Putting these numbers in our options data below, we note that the option proceeds are $1.014
Step 9FStock

Options: Forecast Restricted Stock Unit Data
In addition to the stock options, there are Restricted Stock Units given to the employees with the
weighted average period of 2.2 years
Colgate 201310K, Page 81 Populating this data in the Options data set
For simplicity sake, we have not projected options issuance (I know this is not the right
assumption, however, due to lack of data, I am not taking any more option issuances going
forward. We have just taken these as zero as highlighted in the grey area above. Additionally, the
restricted stock units are projected to be 2.0 million going forward.
Step 9G- Dividends: Forecast the Dividends
Forecast estimated dividends using

Pay out ratio

Fixed dividend outgo
Per share payout
From the 10K reports we extract all past information on dividends
With the informatio of dividends paid, we can find out the Dividends payout ratio = Total
Dividends Paid / Net Income.
I have calculated the dividends payout ratio of Colgate as seen below
We note that the dividends payout ratio has been broadly in the range of 50%-60%. Let us take
an assumption of Dividends payout ratio of 55% in the future years.
We can also link the projected Net Income from the Income statement
Using both the projected Net Income and the dividends payout ratio, we can find the Total
Dividends Paid
Step 8HForecast

equity account in its entirety
With the forecast of share repurchase, option proceeds and dividends paid, we are ready to
complete the Shareholders Equity Schedule. Link all these up to find the Ending Equity Balance
for each year as shown below.
Step 9ILink

Ending Shareholders Equity to the Balance Sheet
Step 9JLink

Dividends, Share repurchase & Options proceeds to CF


Outstanding Schedule
The next step in this online financial modeling training is to look at the Shares Oustanding
Schedule. Summary of Shares Outstanding Schedule
Basic Sharesactual

and average
Capture past effects of options and convertibles as appropriate
Diluted Sharesaverage

Reference Shares repurchased and new shares from exercised options
Calculate forecasted basic shares (actual)
Calculate average basic and diluted shares
Reference projected shares to Income Statement (recall Income Statement Build up!)
Input historical shares outstanding information
Note: This schedule is commonly integrated with the Equity Schedule

Step 10AInput

the historical numbers from the 10K report
Shares issued (actual realization of options) and shares repurchased can be referenced from the
Shareholders Equity Schedule
Also, input weighted average number of shares and effect of stock options for the historical
Step 10BLink

share issuances & repurchases from Share Equity Schedule.
Basic Shares (Ending) = Basic Shares (Beginning) + Share IssuancesShares

Step 10CFind

the basic weighted average shares,
we find the average of two years as shown below.

Also, add the effect of options & restricted stock units (referenced from the shareholders equity
schedule) to find the Diluted Weighted Average Shares.
Step 10DLink

Basic & diluted weighted shares to Income Statement
Now that we have calculated the diluted weighted average shares, it is time for us to update the
same in the Income Statement.
Link up forecasted diluted weighted average shares outstanding to Income Statement as shown
With this we complete the Shares Oustanding Schedule and time to move to our next set of

the Cash Flow Statements
It is important for us to fully completed the cash flow statements before we move to our next and
final schedule i.e. the Debt Schedule Until this stage, there are only a couple of things that are
Income Statementinterest

expense/ income are incomplete at this stage
Balance Sheetcash

and debt items are incomplete at this stage
Step 11ACalculate

Cash Flow for Financing Activities
Step 11BFind

net increase (decrease) in Cash & Cash Equivalents
Step 11C = Complete the cash flow statements
Find the year end cash & cash equivalents at the end of the year.

Step 11DLink

the cash & cash equivalents to the Balance Sheet.
Now we are ready to take care of our last and final schedule, i.e. Debt and Interest Schedule
#12- Debt and Interest Schedule
The next step in this Online Financial Modeling Training Course is to complete the Debt and
Interest Schedule. Summary of the Debt and InterestSchedule

Step 12ASet

up a Debt Schedule
Reference the Cash Flow Available for Financing
Reference all equity sources and uses of cash
Step 12BCalculate

Cash Flow from Debt Repayment
Reference the Beginning Cash Balance from the Balance Sheet
Deduct a minimum cash balance. We have assumed that Colgate would like to keep a minimum
of $500 million each year.
Skip Long Term Debt Issuance/ Repayments, Cash available for Revolving Credit Facility and
Revolver section for now
From Colgates 10K report, we note the available details on Revolved Credit Facility
Colgate 201310K, Page 35 Also provided in additional information on Debt is the committed
long term debt repayments.
Colgate 201310K, Page 36
Step 12CCalculate

the Ending Long Term Debt

We use the Long Term Debt repayment schedule provided above and calculate the Ending
Balance of Long Term Debt Repayments
Step 12DLink

the long term debt repayments.
Step 12E -Calculate the discretionary borrowings/paydowns
Using the cash sweep formula as shown below, calculate the discretionary borrowings /
Step 12FCalculate

the Interest Expense from the Long Term Debt
Calculate the average balance for Revolving Credit Facility and Long Term Debt
Make a reasonable assumption for an interest rate based on the information provided in the 10K
Calculate Total Interest Expense = average balance of debt x interest rate
Find the Total Interest Expense = Interest (Revolving Credit Facility) + Interest (Long Term
Step 12GLink

Principal debt & Revolver drawdowns to Cash Flows
Step 12HReference

Current and Long Term to Balance Sheet
Demarcate the Current Portion of Long Term Debt and Long Term debt as show below
Link the Revolving Credit Facility, Long Term Debt and Current Portion of Long Term Debt to
the Balance Sheet

Step 12ICalculate

the Interest Income using the average cash balance
Step 12JLink

Interest Expense and Interest Income to Income Statement
Perform the Balance Sheet check : Total Assets = Liabilities + Shareholders Equity
Step 12KAudit

the Balance Sheet
If there is any discrepancy, then we need to audit the model and check for any linkage errrors
Recommended Financial Modeling Course
Hope you enjoyed the Free Financial Modeling Course. If you wish to learn Financial Modeling
through our expert video lectures, you may also look at our Financial Modeling Training
Financial Modeling Training Course Highlights
Resources Financial Modeling Training Highlights 83 Excel, 63 Videos, 29 PDFs Financial
Modeling course starts with gaining Excel proficiency, Sensitivity Analysis, Macros, Graphs &
Charts, Formatting, Excel Short Cuts. 56 Videos Create Time saver shortcuts using Macros &
Automate your regular mundane tasks. 2 Excel, 28 Videos Financial Modeling training involves
building a step-by-step advanced financial model, Concept of circularity, Understand the Key
Linkages of IS, BS and CF, Arriving at DCF Valuations. 6 Excel, 34 Videos In this Financial
Modeling course, learn how to read the Annual Reports of Asian Paints, understand the footnotes
and prepare Integrated financial model of Asian Paints. 4 Excel, 26 Videos, 3 PDFs In this
Financial Modeling course, Learn how to read the Annual Reports of Google Inc, understand the
footnotes and prepare Integrated financial model of Google Inc. 4 Excel,47 Videos, 4 PDFs In
this Financial Modeling course, Learn to build a excel based financial model of Management
Institute and a School , Provides an overview of K-12 segment and overall Education sector. 2
Excel,19 Videos, 15 PDFs Tips and Techniques to write professional Research Reports like
Result Update, Initiation Report, Thematic Report, etc.
VBAs & Macros
Financial Modeling Training Using Excel
Financial Modeling TrainingPaint

Financial Modeling Training IT Sector

Financial Modeling Training Education Sector

Report Writing Techniques
Course Content
Excel & Advanced Excel
Free Financial Models
You may download full integrated Financial Models from the link below
Colgate Financial Model
Alibaba Financial Model
Box IPO Financial Model
What next?
If you learned something new or enjoyed this Financial Modeling Training Course, please leave
a comment below. Let me know what you think. Many thanks and take care. Happy Learning!