Financial modelling
Financial modelling in Panama
A financial model is not a spreadsheet with projections. It is a tool for answering hard questions before they cost money: what happens if the price falls ten per cent, if collection stretches by thirty days, if the rate rises two points.
DB Consultants Group builds financial models for companies in Panama — open, auditable, and left in the client’s hands.
What for
The decisions a model supports
- Projecting the business. Income statement, balance sheet and cash flow over three to five years, reconciled to each other.
- Evaluating an investment. Net present value, internal rate of return and payback period for a specific project.
- Supporting a credit application. The case the committee needs to see, with the sensitivity analysis it is going to ask for.
- Valuing the company. A discounted cash flow is built on a model; without one there is no defensible valuation.
- Budgeting and control. Comparing actual against projected every month and understanding the variance.
- Simulating debt structures. Which repayment schedule the business can carry and which one suffocates it.
How it should be built
The rules of a model that can be audited
Assumptions kept separate
Every assumption on its own sheet, labelled and sourced. No figure written inside a formula: if you have to hunt for a number in the middle of a calculation, the model has already failed.
The three statements reconcile
Income statement, balance sheet and cash flow connected. A balance sheet that balances is the proof that the model carries no propagation errors.
Scenarios on a switch
Base, optimistic and pessimistic, changed from a single cell rather than by duplicating the file. Duplicating files is how traceability gets lost.
Built-in checks
Automatic controls that flag when something stops reconciling. A long model without internal checks ends up producing a number nobody can defend.
The model is delivered open, with no locked cells and no closed macros, and with a sheet explaining how it is built. The company has to be able to keep using it without calling anyone.
The process
How it is built
- What questions it has to answerA model for a credit application, one for a valuation and one for budgeting look nothing alike. Defining the use before opening the spreadsheet avoids rebuilding it.
- Historical dataThree to five years, normalised, which is the base against which any projection is calibrated.
- Structure and assumptionsRevenue and cost drivers, working capital, capital expenditure, debt and taxes, each with its own sheet and its own logic.
- Building and checkingThe three statements linked, with internal controls and extreme-value testing.
- Scenarios and sensitivityWhich variables actually move the result and how much room each of them has.
- Handover and trainingA session with whoever will use it, so they can update it and explain it.
Two to five weeks depending on scope and on the state of the historical information.
Warnings
Five flaws that invalidate a model
- Numbers written inside formulas. Changing one assumption means combing the whole file, and one always gets missed.
- A balance sheet that does not balance. If it does not balance there is an error somewhere and no conclusion is reliable.
- Growth without investment. Projecting double the sales without the working capital and the assets that requires.
- A discount rate borrowed from another market. It makes almost any project look profitable on paper.
- A single scenario. A number without a range does not inform a decision: it disguises one.
Common questions
Frequently asked questions
How is the model delivered?
As an open spreadsheet, with no locked cells and no closed macros, including a sheet documenting the structure and the assumptions. The company can keep using it on its own.
How long does it take to build?
Two to five weeks, depending on scope and on the state of the historical information.
Can it be presented to a bank?
Yes. It is built to the standard of evidence a credit committee expects: visible assumptions, scenarios and sensitivity analysis on the critical variables.
Can you review a model we already have?
Yes. Reviewing an existing model is a frequent engagement: the logic is verified, propagation errors are hunted down and the balance sheet is checked.
Can the model be built in English?
Yes. The model, its documentation sheet and the handover session can all be in English, and the same file can carry labels in both languages when the local team works in Spanish and the shareholder reads in English.
What is the difference between a model and a budget?
A budget sets targets for a financial year. A model lets you ask what happens if those targets are missed, and see the effect on cash flow and on debt.
Does it include training?
Yes. The handover includes a session with whoever will use the model, so they can update it and explain it without depending on anyone else.
Is the engagement confidential?
Yes. The nature of every engagement is confidential and is not disclosed without the client’s written authorisation.
Let’s talk about your model
A first conversation is enough to define what questions it has to answer and what information exists. It is confidential and commits you to nothing.