AFM 4

This Q&A podcast focuses on building financial models in Excel, specifically addressing questions from participants in a financial modeling program. The session begins with a review of previous material (revenue, cost, and CAPEX schedules), followed by a detailed explanation of how to create a depreciation schedule using various Excel functions like IF, MIN, HLOOKUP, and MATCH, emphasizing dynamic formulas over hard-coded values. The instructor then guides participants through building a tax schedule, highlighting the differences between accounting and tax depreciation methods (straight-line vs. declining balance) and the implications for cash flow and valuation. Finally, the session covers the construction of a working capital schedule, explaining how to calculate and forecast working capital items (accounts receivable, inventory, accounts payable) in days outstanding. The instructor stresses the importance of using dynamic formulas to avoid errors when making changes to the model.