From the course: Financial Modeling Foundations

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Corkscrews and models

Corkscrews and models - Microsoft Excel Tutorial

From the course: Financial Modeling Foundations

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Corkscrews and models

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- [Instructor] A common technique in building detailed financial models, is for one periods sales value to be related to the next period. The same thing holds true with many costs, debts and other financial variables. This relationship is called a corkscrew, and it's an important concept to be aware of in modeling. This is an example of a buy out model. Now, one thing that I want you to notice is that in addition to the buy out model itself, shown on this sheet, there's also a DCF model and a three statement model. The three different models are linked together in the buy out model. The reason for this is that the take aways from the buy out model, whether this particular investment should be made or not, requires information that is available in the DCF model, related to valuation and rate of return, and in the three statement model, related to projections about where the company is going in the future, in terms of it's sales, profits and costs. We can observe that looking at any of…

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