From the course: Financial Modeling Foundations

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Top-down financial models

Top-down financial models

From the course: Financial Modeling Foundations

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Top-down financial models

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- [Instructor] It's very common to build top-down financial models, where we start by looking at the overall market and then see how this flows down to our specific firm. Let's take a look at an example. I'm in the 06_03_Begin Excel file. Now, you see that we've built out our Acme three-statement model, and we have started with this CAGR, or compounded annual growth rate. And we're gonna build our revenues off of CAGR, as you see here, and we've set this to 10%, right? We feel like that's a reasonable level given our scenario, okay? And this is tied to our toggle, and then I've added this additional toggle in for top-down. Now, right now, I have this set to 0, okay? We could go through and we could restrict the values that are allowed in this cell. And we saw this previously where we looked at interest rates and we used two different methods for valuation, right, an EBITDA method and terminal value method based on…

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