2. Financial Model
This business provided 5 years of financial data and wanted to project a
budget forecast for 5 year into the future.
Assumptions:
• Revenue growth starting at 5% and gradually decreasing 0.5% every year.
• COGS starting at 37% and decreasing 1% every 2 years.
• Rent and overhead at a fixed $10,000 every year.
• Depreciation and amortization at a fixed 40% every year.
• Tax rat at a consistent 28% every year.
• Account receivable days (18), inventory days (73), accounts payable days (37)
are all fixed on the balance sheet.