From the course: Financial Modeling Foundations

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Beyond the basics in financial models

Beyond the basics in financial models

From the course: Financial Modeling Foundations

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Beyond the basics in financial models

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- [Instructor] We've gone through and created a three-statement model and a DCF model, and those are fine, but they're also fairly simplistic models. We often need more advanced models when it comes to modeling buyouts of other firms or complicated deals. In particular, we need to be able to examine the cash flows in the future and then show actions dependent on those cash flows. There are three key modeling techniques that we're gonna need to talk about, corkscrews, toggles, and waterfalls. Each of these help to create more robust models that represent more complex actions in corporate finance. And advanced models often link simpler models together. For example, our DCF model might be linked to a buyout model, which is linked to our three-statement model. Building out this type of structure, then, allows us to see how changes flow through from one part of the model to another based on the assumptions that we make.…

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