Financial Model Schema
Setting up your financial model structure is the foundation for a robust forecast.
While every model is different, they almost all follow the same schema.
When your schema is well defined, it allows for easy editing, and a clear and cohesive view for your readers to ingest the material
The general idea is that your model should follow this structure:
Each section feeds into the next, allowing for maximum flexibility & comprehension on your models.
Source Data can be any external information that you bring into your model…
most commonly those are your financial statements, headcount, and customer details.
The idea is that this data should be imported into your model in their native format, making it easier to refresh...
and if need be, you can clean your data using Power Query.
It’s common to consolidate as much as possible with your inputs into just one tab.
This makes it easy for your readers to understand all the assumptions that go into your model, allowing for a centralized location where everything can be tweaked.
Sometimes though, you may have too much information to fit on one tab.
That’s where your other input tabs come into play, which will then all push to your centralized drivers tab
Now that you have your source tabs…
and you’ve tweaked your assumptions on your input tabs…
it’s time to present your findings.
The most important findings will be the output for your 3 financial statements
It’s also common to divide up your output tabs between detailed outputs (IE, your full P&L, Balance Sheet and Cash Flows)…
and summarized outputs
with summarized outputs, you gain the ability to understand what is happening at a high level, before diving deep into the weeds.
Dashboards & Reporting - Financial Model Schema
Now comes my favorite part of a model…
Your Dashboards & Reporting.
This is where you woo your audience with beautiful visuals that summarize the key information 🤩
For more information on how to prepare these dashboards, check out my course on CFO Dashboards & Reporting
It’s common to also include a table of contents with your models so that the readers can understand how everything is laid out, and where the edits can be made.
Remember…your models are not just for yourself - they will almost always be reviewed and tweaked by outside parties.
The more coherent & clear the structure of your model is, the easier it is for you to manage and nail your projections.
Those are my tips for how I create a financial model schema.