Economic Analysis: Theory and Practice
 

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A methodology for financial modeling based on published consolidated financial statements

Vol. 16, Iss. 7, JULY 2017

Received: 7 June 2017

Received in revised form: 21 June 2017

Accepted: 4 July 2017

Available online: 27 July 2017

Subject Heading: BUSINESS PERFORMANCE

JEL Classification: G30, G32

Pages: 1269–1285

https://doi.org/10.24891/ea.16.7.1269

Kogdenko V.G. National Research Nuclear University MEPhI, Moscow, Russian Federation
kogdenko7@mail.ru

Importance The article considers modeling the company performance on the basis of published information.
Objectives The purpose of the study is to develop a methodology for financial modeling based on consolidated financial statements and other published information.
Methods The article presents algorithms for prospective financial analysis and calculations based on Excel 2016 forecasting tools that allow modeling and evaluating the company's future performance and financial results using the published information.
Results The developed methodology includes five stages. At the first stage of the analysis, the company's strategy is determined using the space analysis based on quantitative assessments of external and internal environment. At the second stage, the algorithm for revenue forecasting and other financial results is underpinned based on exponential smoothing and trend model building. At the third stage, regression models of current and capital expenditures are built and other indicators are justified that are needed to calculate projected financial results. At the fourth stage, parameters of the realistic, pessimistic and optimistic scenarios of company's development are substantiated. At the final stage, projected financial results and the fundamental value of the company are calculated and the likelihood of achieving the results. The proposed methodology is tested on the data of a Russian strategic company.
Conclusions and Relevance The presented methodology may be useful for analysts evaluating the company's activities on the basis of consolidated financial statements.

Keywords: predictive financial analysis, space analysis, trend model, exponential smoothing, regression model

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