Instructions

FIRST, MAKE SURE TO TURN ITERATIONS ON

Go to File -> Options -> Enable iterations
Windows Excel: Alt F T -> F -> Alt + i
Mac Excel: Command + Comma -> Hit Calculations -> Enable iterations

The number one question we get asked is “how do I build expertise in financial modeling?” We’ve
created this free tool for you to practice!! The first file is a completed financial model using inputs
we’ve *made up*. The second is a blank template.

Our recommendation is that you first try to recreate the completed model in the template. Do it a
few times. Once you get those reps in, pull actual filings (10Ks, 10Qs, etc) from
https://www.sec.gov/edgar/searchedgar/companysearch, CapIQ, Factset, etc. and practice building
on your own!

Friendly reminders:

All inputs are in BLUE

All cells in GREEN reference another sheet
Cells in BLACK are the result of calculations
RED signals a warning or something out of the ordinary
“Parity Check” tells you whether or not your model is balanced! If it's not 0.000, it's not balanced.
The debt schedule is more advanced than your traditional model

The Wall Street Skinny Copyright 2024

 Project The Wall Street Skinny (US $000's except per share items in C$)

Assumptions

Control Toggles Operating model assumptions 2023 Hist 2024 Proj

Circ Switch On Corporate Tax Rate xxx 25.0%
Days (Used for Activity Ratios) 365 Sales Growth 2024 7% 6%
Sales Growth Improvement / (Decline) NA (0.5%)
Financing assumptions Gross Margin 2024 - 60%
Interest Rate on Revolver SOFR + 150 bps Gross Margin Improvement (per annum) NA 50 bps
Long Term Debt Interest Rate (Bank Loans) SOFR + 200 bps Operating Margin Improvement (per annum) NA 75 bps
Excess Cash Flow Sweep 100.0% CapEx as a % of Sales - 8%
Mandatory Term Loan Amortization 1.0% Depreciation as a % of CapEx - 80%
Interest Income Rate 5.0% Depreciation as a % of CapEx by terminal year NA 100%
Accounts Receivable Days 0 30
Inventory Days 0 65
Accounts Payable Days 0 20
Additions to Def Life Intangibles as a % of Sales 0% 1%
Amortization as a % of Additions to Def Life Intangibles 0% 75%
Dividend Payout Ratio 0% 55%
Minimum Cash ($mm) 50

The Wall Street Skinny Copyright 2024

 Income Statement
Figures in 000's 2023 2024 2025 2026 2027 2028
Years 1 2 3 4 5

Sales $1,000
COGS 400
Gross Profit
SG&A 350
Operating Income
Interest Expense 6
Interest (Income) (4)
Pretax Income
Taxes 63
Net Income

Memo: EBITDA Calculation

Operating Income
Depreciation
Amortization
EBITDA

Assumptions
Sales Growth 6% 6% 5% 5% 4%
Gross Margin 60% 61% 61% 62% 62%
SG&A as a % of Sales 35% 35% 35% 34% 34% 34%
Operating Margin

The Wall Street Skinny Copyright 2024

 Cash Flow Statement
2024 2025 2026 2027 2028

Net Income
Depreciation
Amortization
Change in Working Capital
Change in Other Assets and Liabilities
Total Operating Cash Flows (CFO)

CapEx
Additions to Intangibles
Total Investing Cash Flows (CFI)

Revolver Issuance / (Repayment)

Long Term Debt Repayment
Dividends
Total Financing Cash Flows (CFF)

Net Change in Cash

Beginning Cash Balance
Ending Cash Balance

The Wall Street Skinny Copyright 2024

 Balance Sheet
2023 2024 2025 2026 2027 2028

Cash $60
Accounts Receivable 80
Inventories 70
Other Current Assets 40
Current Assets

PP&E 100
Definite Life Intangbiles 20
Indefinite Life Intangibles 50
Goodwill 80
Other Assets 10
Total Assets

Accounts Payable 20
Other Current Liabilities 30
Current Liabilities

Revolver 50
Debt 100
Other Long Term Liabilities 10
Total Liabilities

Equity 300

Total Liabilities and Equity

Parity Check 0.000 0.000 0.000 0.000 0.000 0.000

The Wall Street Skinny Copyright 2024

 Working Capital Schedule
Figures in 000's 2023 2024 2025 2026 2027 2028

Relationship Drivers
Sales
COGS

Balances
Accounts Receivable
Inventories
Other Current Assets
Total Non Cash Current Assets

Accounts Payable
Other Current Liabilities
Total Non Debt Current Liabilities

Net Working Capital

Change in Net Working Capital

Activity Ratios
Accounts Receivable Days 30 30 30 30 30
Inventory Days 65 65 65 65 65
Accounts Payable Days 20 20 20 20 20

The Wall Street Skinny Copyright 2024

 Property, Plant and Equipment (PP&E)
2023 2024 2025 2026 2027 2028

Relationship Drivers
Sales

CapEx $80
CapEx as a % of Sales 8% 8% 8% 8% 8%

Depreciation 60
Depreciation as a % of CapEx 80% 85% 90% 95% 100%

Beginning PP&E
+ CapEx
- Depreciation
Ending PP&E

The Wall Street Skinny Copyright 2024

 Definite Life Intangibles
2023 2024 2025 2026 2027 2028

Relationship Drivers
Sales

Additions to Def Life Intangibles $10

Additions to Def Life Intangibles as a % of Sales 1% 1% 1% 1% 1%

Amortization 8
Amortization as a % of Additions to Def Life Intangi 75% 75% 75% 75% 75%

Beginning Definite Life Intangibles Balance

+ Additions to Def Life Intangibles
- Amortization
Ending Definite Life Intangibles Balance

The Wall Street Skinny Copyright 2024

 Other Assets and Liabilities
2023 2024 2025 2026 2027 2028

Indefinite Life Intangibles

Goodwill
Other Assets

Other Long Term Liabilities

Total Other LT Assets - Liablities

Change in Other LT Assets - Liabilities

The Wall Street Skinny Copyright 2024

 Equity
2023 2024 2025 2026 2027 2028

Dividends
Net Income
Dividends 99 0 0 0 0 0
Dividend Payout Ratio

Beginning Equity Balance

+ Net Income
- Dividends
Ending Equity Balance

The Wall Street Skinny Copyright 2024

 Debt
2023 2024 2025 2026 2027 2028

Cash Flow Waterfall

Operating Cash Flows
Investing Cash Flows
Free Cash Available for Financing
Dividends
Beginning Cash Balance
(Minimum Cash)
Free Cash Available for Revolver
Revolver Issuance / (Payment)
Free Cash Available for Long Term Debt Paydown

Balances
Revolver
Issuance / (Repayment)
Ending Debt Balance

Beginning Debt Balance

Mandatory Amortization
Free Cash Flow Sweep
Ending Debt Balance

Interest Calculations
SOFR 5.30% 4.50% 4.00% 3.75% 3.50%

Revolver
Spread 150 bps 150 bps 150 bps 150 bps 150 bps
All in Interest Rate
Average Balance
Interest Expense

Long Term Debt

Spread 200 bps 200 bps 200 bps 200 bps 200 bps
All in Interest Rate
Average Balance
Interest Expense

Total Interest Expense

Average Cash Balance

Interest Rate 5.0% 5.0% 5.0% 5.0% 5.0%
(Interest Income)

The Wall Street Skinny Copyright 2024

 Project The Wall Street Skinny (US $000's except per share items in C$)

Assumptions

Control Toggles Operating model assumptions 2023 Hist 2024 Proj

Circ Switch On Corporate Tax Rate 25.4% 25.0%
Days (Used for Activity Ratios) 365 Sales Growth 2024 7% 6%
Sales Growth Improvement / (Decline) NA (0.5%)
Financing assumptions Gross Margin 2024 60% 60%
Interest Rate on Revolver SOFR + 150 bps Gross Margin Improvement (per annum) NA 50 bps
Long Term Debt Interest Rate (Bank Loans) SOFR + 200 bps Operating Margin Improvement (per annum) NA 75 bps
Excess Cash Flow Sweep 100.0% CapEx as a % of Sales 8% 8%
Mandatory Term Loan Amortization 1.0% Depreciation as a % of CapEx 75% 80%
Interest Income Rate 5.0% Depreciation as a % of CapEx by terminal year NA 100%
Accounts Receivable Days 29 30
Inventory Days 64 65
Accounts Payable Days 18 20
Additions to Def Life Intangibles as a % of Sales 1% 1%
Amortization as a % of Additions to Def Life Intangibles 75% 75%
Dividend Payout Ratio 54% 55%
Minimum Cash ($mm) 50

The Wall Street Skinny Copyright 2024

 Income Statement
Figures in 000's 2023 2024 2025 2026 2027 2028
Years 1 2 3 4 5

Sales $1,000 $1,060 $1,118 $1,174 $1,227 $1,276

COGS 400 424 442 458 472 485
Gross Profit 600 636 677 716 755 791
SG&A 350 368 386 402 417 431
Operating Income 250 268 291 314 337 361
Interest Expense 6 8 3 0 0 0
Interest (Income) (4) (3) (2) (5) (9) (15)
Pretax Income 248 262 290 319 347 375
Taxes 63 66 73 80 87 94
Net Income $185 $197 $218 $239 $260 $281

Memo: EBITDA Calculation

Operating Income $250 $268 $291 $314 $337 $361
Depreciation $60 $68 $76 $85 $93 $102
Amortization $8 $8 $8 $9 $9 $10
EBITDA $318 $343 $375 $407 $440 $472

Assumptions
Sales Growth 6% 6% 5% 5% 4%
Gross Margin 60% 60% 61% 61% 62% 62%
SG&A as a % of Sales 35% 35% 35% 34% 34% 34%
Operating Margin 25% 26% 27% 27% 28%

The Wall Street Skinny Copyright 2024

 Cash Flow Statement
2024 2025 2026 2027 2028

Net Income $197 $218 $239 $260 $281

Depreciation 68 76 85 93 102
Amortization 8 8 9 9 10
Change in Working Capital (9) (7) (7) (6) (6)
Change in Other Assets and Liabilities 0 0 0 0 0
Total Operating Cash Flows (CFO) $263 $295 $326 $356 $388

CapEx (85) (89) (94) (98) (102)

Additions to Intangibles (11) (11) (12) (12) (13)
Total Investing Cash Flows (CFI) ($95) ($101) ($106) ($110) ($115)

Revolver Issuance / (Repayment) (50) 0 0 0 0

Long Term Debt Repayment (20) (75) (5) 0 0
Dividends (108) (120) (131) (143) (155)
Total Financing Cash Flows (CFF) ($179) ($195) ($136) ($143) ($155)

Net Change in Cash (11) 0 84 103 118

Beginning Cash Balance 60 49 49 133 236
Ending Cash Balance $49 $49 $133 $236 $354

The Wall Street Skinny Copyright 2024

 Balance Sheet
2023 2024 2025 2026 2027 2028

Cash $60 $49 $49 $133 $236 $354

Accounts Receivable 80 87 92 97 101 105
Inventories 70 76 79 82 84 86
Other Current Assets 40 40 40 40 40 40
Current Assets 250 252 260 351 461 585

PP&E 100 117 130 140 145 145

Definite Life Intangbiles 20 23 25 28 31 35
Indefinite Life Intangibles 50 50 50 50 50 50
Goodwill 80 80 80 80 80 80
Other Assets 10 10 10 10 10 10
Total Assets 510 531 555 659 777 904

Accounts Payable 20 23 24 25 26 27
Other Current Liabilities 30 30 30 30 30 30
Current Liabilities 50 53 54 55 56 57

Revolver 50 0 0 0 0 0
Debt 100 80 5 0 0 0
Other Long Term Liabilities 10 10 10 10 10 10
Total Liabilities 210 143 69 65 66 67

Equity 300 388 486 594 711 838

Total Liabilities and Equity $510 $531 $555 $659 $777 $904

Parity Check 0.000 0.000 0.000 0.000 0.000 0.000

The Wall Street Skinny Copyright 2024

 Working Capital Schedule
Figures in 000's 2023 2024 2025 2026 2027 2028

Relationship Drivers
Sales $1,000 $1,060 $1,118 $1,174 $1,227 $1,276
COGS 400 424 442 458 472 485

Balances
Accounts Receivable $80 $87 $92 $97 $101 $105
Inventories 70 76 79 82 84 86
Other Current Assets 40 40 40 40 40 40
Total Non Cash Current Assets 190 203 211 218 225 231

Accounts Payable 20 23 24 25 26 27
Other Current Liabilities 30 30 30 30 30 30
Total Non Debt Current Liabilities $50 $53 $54 $55 $56 $57

Net Working Capital 140 149 156 163 169 175

Change in Net Working Capital (9) (7) (7) (6) (6)

Activity Ratios
Accounts Receivable Days 29 30 30 30 30 30
Inventory Days 64 65 65 65 65 65
Accounts Payable Days 18 20 20 20 20 20

The Wall Street Skinny Copyright 2024

 Property, Plant and Equipment (PP&E)
2023 2024 2025 2026 2027 2028

Relationship Drivers
Sales $1,000 $1,060 $1,118 $1,174 $1,227 $1,276

CapEx $80 $85 $89 $94 $98 $102

CapEx as a % of Sales 8% 8% 8% 8% 8% 8%

Depreciation 60 68 76 85 93 102
Depreciation as a % of CapEx 75% 80% 85% 90% 95% 100%

Beginning PP&E 100 117 130 140 145

+ CapEx 85 89 94 98 102
- Depreciation (68) (76) (85) (93) (102)
Ending PP&E 100 117 130 140 145 145

The Wall Street Skinny Copyright 2024

 Definite Life Intangibles
2023 2024 2025 2026 2027 2028

Relationship Drivers
Sales $1,000 $1,060 $1,118 $1,174 $1,227 $1,276

Additions to Def Life Intangibles $10 $11 $11 $12 $12 $13
Additions to Def Life Intangibles as a 1% 1% 1% 1% 1% 1%

Amortization 8 8 8 9 9 10
Amortization as a % of Additions to D 75% 75% 75% 75% 75% 75%

Beginning Definite Life Intangibles Balance 20 23 25 28 31

+ Additions to Def Life Intangibles 11 11 12 12 13
- Amortization (8) (8) (9) (9) (10)
Ending Definite Life Intangibles Balan 20 23 25 28 31 35

The Wall Street Skinny Copyright 2024

 Other Assets and Liabilities
2023 2024 2025 2026 2027 2028

Indefinite Life Intangibles $50 $50 $50 $50 $50 $50

Goodwill 80 80 80 80 80 80
Other Assets 10 10 10 10 10 10

Other Long Term Liabilities 10 10 10 10 10 10

Total Other LT Assets - Liablities $130 $130 $130 $130 $130 $130

Change in Other LT Assets - Liabilities 0 0 0 0 0

The Wall Street Skinny Copyright 2024

 Equity
2023 2024 2025 2026 2027 2028

Dividends
Net Income $185 $197 $218 $239 $260 $281
Dividends 99 108 120 131 143 155
Dividend Payout Ratio 54% 55% 55% 55% 55% 55%

Beginning Equity Balance 300 388 486 594 711

+ Net Income 197 218 239 260 281
- Dividends (108) (120) (131) (143) (155)
Ending Equity Balance 300 388 486 594 711 838

The Wall Street Skinny Copyright 2024

 Debt
2023 2024 2025 2026 2027 2028

Cash Flow Waterfall

Operating Cash Flows $263 $295 $326 $356 $388
Investing Cash Flows (95) (101) (106) (110) (115)
Free Cash Available for Financing $168 $195 $220 $246 $273
Dividends (108) (120) (131) (143) (155)
Beginning Cash Balance 60 49 49 133 236
(Minimum Cash) (50) (50) (50) (50) (50)
Free Cash Available for Revolver $69 $74 $88 $186 $304
Revolver Issuance / (Payment) (50) 0 0 0 0
Free Cash Available for Long Term Debt Paydo $19 $74 $88 $186 $304

Balances
Revolver 50 0 0 0 0
Issuance / (Repayment) (50) 0 0 0 0
Ending Debt Balance 50 0 0 0 0 0

Beginning Debt Balance 100 80 5 0 0

Mandatory Amortization 1% (1) (1) (1) 0 0
Free Cash Flow Sweep 100% (19) (74) (4) 0 0
Ending Debt Balance 100 80 5 0 0 0

Interest Calculations
SOFR 5.30% 4.50% 4.00% 3.75% 3.50%

Revolver
Spread 150 bps 150 bps 150 bps 150 bps 150 bps
All in Interest Rate 6.80% 6.00% 5.50% 5.25% 5.00%
Average Balance 25 0 0 0 0
Interest Expense 2 0 0 0 0

Long Term Debt

Spread 200 bps 200 bps 200 bps 200 bps 200 bps
All in Interest Rate 7.3% 6.5% 6.0% 5.8% 5.5%
Average Balance 90 42 2 0 0
Interest Expense 7 3 0 0 0

Total Interest Expense 8 3 0 0 0

Average Cash Balance $55 $49 $91 $184 $295

Interest Rate 5.0% 5.0% 5.0% 5.0% 5.0%
(Interest Income) (3) (2) (5) (9) (15)

The Wall Street Skinny Copyright 2024