Glossary: M12 Financial Statement Modeling
| Term | Definition |
|---|
| Financial Statement Modeling | Building projected (pro forma) financial statements based on assumptions about future performance |
| Revenue Forecast | Projection of future revenues using growth rates, market analysis, or segment-level estimates |
| Expense Modeling | Projecting costs based on historical margins, cost structure, and operating leverage |
| Sensitivity Analysis | Examining how changes in a single input assumption affect model outputs |
| Scenario Analysis | Evaluating outcomes under different sets of assumptions (base, bull, bear cases) |
| Base Case | Most likely set of assumptions in a financial model |
| Bull Case | Optimistic scenario with favorable assumptions |
| Bear Case | Pessimistic scenario with adverse assumptions |
| Integrated Financial Model | Model linking income statement, balance sheet, and cash flow statement so changes flow through consistently |
| Balancing Item | Line item (typically cash or debt) that ensures the balance sheet balances in a projected model |