Modelling revenue - solution
The main sections of the revenue calculation should be somewhat familiar since we saw them earlier in the book when we were practising our essential skills.
Download revenue section solution model:
To obtain the worked example file to accompany this chapter buy the financial modelling handbook.
I have set up the four key calculation blocks for:
- degradation
- seasonality
- electricity generation
- revenue
I have also linked the revenue into the income statement:
I have run the Section Completion Checklist. The checklist reminded me to relocate the inputs, check spelling, apply grouping, etc.
Reviewing any active checks is a step in our Section Completion Checklist. I currently do have two active errors:
These errors tell me that my balance sheet is not balancing. It is out of balance because the revenue flowing through the income statement differs from the cash flowing through the cash flow statement. We still have the old placeholder on the cash flow statement.
Our case study tells us that invoices will be paid within 15 days of month-end. We will therefore turn in the next chapter to dealing with working capital.
Update: See this Q&A with a suggested alternative formula for degradation
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