Using a financial model template is valuable because it provides a structured framework for analyzing and projecting financial data, saving time and effort in building models from scratch. Additionally, templates often incorporate best practices and industry-specific formulas, improving accuracy and reliability of financial forecasts.
I've got over 60 unique financial models here on the site that include assumptions, a pro forma detail, and financial statements and another ~100 templates for other finance uses. On the financial forecasting models, I always include the pro forma detail that acts as a sort of buffer and here is why:
- Having the pro forma detail is a way to show more granularity in all the revenue sources and expense sources as well as seeing key performance metric calculations and other data that would not normally be shown on a traditional income statement.
- It is much easier to build integrated financial statements when you have a more detailed breakdown of calculations to reference rather than trying to go straight from assumptions to income statement, balance sheet, CF statement. If you don't, then it forces less granular and less useful assumptions.
- The pro forma detail still drives down to EBITDA and cash flow, so it is usable in and of itself. Many people will just look at the monthly pro forma detail and go no further because it really drives all other reports.
- The pro forma detail gives an alternative reference point for users that want to easily modify the template, but not have to deal with all the financial statement accounting logic. This is because the details are all on a single tab and the formulas / calculations that go on here are straightforward per the assumption drivers.
- Having extra financial detailed data will make it much easier to build informative charts and graphs that represent the assertions input by the user. This is useful for creating pitch decks and communicating with investors. If you only had the income statement, balance sheet, and cash flow statement, but wanted to show stats like 'subscriber count over time' or 'total locations onboarded' then you would have to start making ancillary tabs that just have chart data. While that is one way to do it, I find it better to have this data all shown within the context of a pro forma. You can show exactly how revenue is derived in this way by listing all rows for the calculations needed to come up with revenue. That usually ends up being valuable charting sources.
- SaaS Financial Models (and membership businesses)
- Industry-specific Financial Models
- Some of the real estate models (assisted living, hotel, apartment buildings, mobile home parks, property management, real estate brokerage)
- Service-based Businesses