With revenue and opex taken care of, it's time to turn our attention to the balance sheet. The case tells us that the total Project Cost will be $100m by COD. This $100m will need to appear on our balance sheet. There are several different ways to account

Let’s take a step by step walkthrough of copying the Accounts receivable logic and adapting it for Accounts payable. Step 1: New Section heading Using Column A as usual. Step 2: Copy the Accounts Receivable logic Use Skill 7: How to copy a calculation block. In this instance, we

The case tells us that: "Payment terms agreed with the O&M contractor specify that the O&M fee will be paid monthly within 30 days of month-end." Therefore, we will have one month of O&M costs unpaid at the end of each quarter.

Here's the step by step build-up of the operating costs block. I find it particularly satisfying that in preparing this calculation block, we use our Core Modelling Skills in order from 1 to 5. Step 1: Add a heading I'm creating some space and adding a

The operating costs in our case study are straightforward. We have one O&M contract with a fixed annual fee of $1.5m per annum. In reality, operating costs for any business, even a solar plant, will be more involved than this. However, the modelling of operating costs will

What happens if different customers or different products have different payment lags?

What happens if the invoice payment lag is longer than the model timeline?

Download the Accounts Receivable solution file: To obtain the worked example file to accompany this chapter buy the financial modelling handbook. Although you can't tell from the solution case, I started with the balance corkscrew. I then added the other two calculation blocks. I prefer to forecast the

Note: This lesson begins from the completed model from the Revenue section: To obtain the worked example file to accompany this chapter buy the financial modelling handbook. This section gives you some useful notes and pointers to help you start modelling Accounts Receivable. If you are feeling brave, take a

Working capital has an enormous impact on the cash flow of any business. You must look carefully at the operating reality of the company you are modelling to understand the working capital dynamics. What is Accounts Receivable? Accounts receivable is a balance. It is the value of invoices that have