Module 10 · Financial Modelling¶
What this module does. Turns the driver logic of Modules 04–06 into a working three-statement model: the
architecture and conventions, building and tying out the historicals, forecasting each schedule (revenue,
costs, working capital, capex/D&A, debt/interest, tax, dividends, cash as the plug), scenarios/sensitivities/QA,
and a hands-on build of the Kaveri model in Python with tools/fi/model.py that reproduces ₹320 and then
stresses it.
Why it matters. A model is how you find out whether your assumptions are mutually consistent — and the only way to see the balance sheet your forecast implies (Kaveri's model shows cash building to ₹220 Cr by FY29, which raises a capital-allocation question no DCF alone would).
Lessons¶
| # | Lesson | One line | Time |
|---|---|---|---|
| 10.1 | Model architecture | Inputs → schedules → statements → valuation → outputs; conventions; Excel vs Python | 60 min |
| 10.2 | Building the historicals | Sources, mapping, reclassification, normalisation, tie-outs, vendor pitfalls | 75 min |
| 10.3 | Forecasting drivers | Revenue and cost builds, days-based NWC, capex/D&A, debt and circularity, tax, dividends, the plug; Kaveri FY27–29 | 100 min |
| 10.4 | Scenarios, sensitivities & model QA | Switches, data tables, tornado, stress tests, the 17-point review | 75 min |
| 10.5 | Build-along: the Kaveri model in Python | The whole pipeline; the receivables stress; pointing it at a real company | 120 min hands-on |
Connections¶
- Back: 02.6, 06.3, 06.4.
- Forward: the model is the engine of the memo (11.3) and the capstone (15.3).
- Tools:
tools/fi/model.py,tools/examples/build_kaveri_model.py,tools/tests/test_model.py.
You're ready to move on when you can…¶
- Lay out a model with inputs in one place, checks on the summary page and cash as the only plug.
- Build and tie out five years of historicals for a real company from primary sources.
- Forecast every schedule from drivers and explain the circularity choice.
- Reproduce Kaveri's FY27–FY36 statements and the ₹320 value with
project(); run the receivables stress. - Produce scenario switches, two-way grids, a tornado and a stress test, and pass the QA checklist.
- Map a real company's Yahoo/Screener data into the model layout and run it.
Tested by: Mock 3 — Valuation (model-based problems) and the final exam case.