Cash Flow/ Pro Forma
Simple cash flow models are often helpful in framing the basic opportunity from a financial perspective. Typically based on the projected cash flows, net revenues and (for taxable entities) taxes they frame the financial aspects of an opportunity.
Net present value (NPV)
A standard method for using the time value of money to appraise long-term projects financial value. NPV has long been an industry standard for managing the financial aspects of projects within a Portfolio. Standardized models are often set up to facilitate the preparation of NPV’s and to allow decision makers to compare the economics of one project to another.
Walko Consulting has applied many modern techniques to gain insight into financial models and aid in identifying the key drivers, critically important to understand where value is being generated from an opportunity.
Sensitivity analysis can be applied to gain a feel for the impact of changes in assumptions on your cash flow models. More advanced techniques such as decision tree analysis for calculating conditional probabilities when multiple outcomes exist.
The most advanced is a Monte Carlo Analysis that returns a range of possible outcomes, together with the probability of their occurrences.