Financial Analysis & Advisory
Financial Modelling built around the decision you need to understand.
A useful financial model does more than project numbers. It connects assumptions, operating drivers, cash requirements and alternative scenarios so management can understand the financial consequences of a decision before acting on it.
A forecast is only as useful as the questions behind it
The decision may be clear. Its financial consequences may not be.
Accounting helps you understand what happened. A financial model helps you explore what could happen next.
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Revenue growth looks attractive — but what happens to cash?
Higher sales can require more inventory, receivables, people or operating capacity before cash is collected.
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Expansion requires investment before the benefit arrives
Management needs to understand capex, operating costs, ramp-up assumptions and the cash required along the way.
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One forecast hides too much uncertainty
A single set of numbers may not show what happens if sales are slower, margins change or costs rise.
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Funding needs are often consequences of operating assumptions
The amount and timing of financing required can change materially when working capital, growth or investment assumptions change.
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Profitability does not always mean liquidity
A decision can improve projected profit while still creating pressure on cash.
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Management assumptions may exist — but not in one connected view
The value of the model is in showing how those assumptions interact.
A financial model should make the assumptions visible and the consequences easier to examine.
Decisions that benefit from a model
Financial Modelling may help when management is considering:
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Business expansion
How would a new location, capacity increase or expansion plan affect revenue, cost, working capital and cash?
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Growth planning
What financial requirements follow different growth assumptions?
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New product / business economics
What needs to be true for the economics to work?
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Cash-flow and funding requirements
When might additional cash be required, how much and under what assumptions?
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Budgeting and forecasting
How could management translate operating assumptions into a connected financial outlook?
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Feasibility assessment
What does the financial picture look like under different operating assumptions?
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Major operating decisions
How might a significant change in volume, pricing, costs, staffing, capacity or timing affect the business?
The model should follow the decision
There is no reason to build complexity that the decision does not require.
Depending on the agreed scope, the model may incorporate:
Operating drivers
- Revenue drivers
- Volumes
- Pricing
- Direct costs
- Margins
- Operating expenses
- Staffing assumptions
Investment and working capital
- Capex
- Working capital
- Receivables
- Payables
- Inventory
Financial outputs
- Relevant taxation assumptions
- Financing assumptions
- Cash flows
- Projected financial statements
Decision analysis
- Scenarios
- Sensitivity analysis
- Funding requirements
The model structure, time horizon and outputs are defined around the management question rather than a standard spreadsheet template.
From question to decision
DEFINE STRUCTURE MODEL TEST INTERPRET DECIDE
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DEFINE
What decision is management trying to understand?
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STRUCTURE
Identify the key business drivers, information requirements and assumptions.
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MODEL
Connect the assumptions to the relevant financial relationships and outputs.
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TEST
Run alternative scenarios and sensitivities around the assumptions that matter.
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INTERPRET
Understand what changes, why it changes and where the main cash, funding or profitability implications sit.
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DECIDE
Use the model as one input into the management decision.
A model should not make the decision for management.
It should make the financial consequences easier to understand.
One decision. Different assumptions. Different outcomes.
Change one assumption and the consequences move through the model.
A worked example of the relationships a model makes visible. The words below describe direction, not amounts — a real model is built on the business’s own assumptions.
- Revenue growth
- Lower
- Working capital
- Moderate
- Capex
- Limited
- Cash pressure
- Lower
- Funding requirement
- May differ
- Revenue growth
- Planned
- Working capital
- Higher
- Capex
- Planned
- Cash pressure
- Moderate
- Funding requirement
- May differ
- Revenue growth
- Higher
- Working capital
- Highest
- Capex
- Accelerated
- Cash pressure
- Higher
- Funding requirement
- May differ
How one change travels
- Revenue growth changes
- Receivables requirement changes
- Working capital changes
- Cash and funding requirement changes
Decision visibility
The value is not the spreadsheet. It is what management can see through it.
What management should be able to examine
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Key assumptions
What needs to be true for the projected outcome to occur?
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Scenario comparison
How does the financial picture change under different operating cases?
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Cash implications
When does cash become constrained or released?
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Funding requirement
What internal or external funding requirement may emerge under the modelled assumptions?
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Major sensitivities
Which assumptions have the greatest effect on the result?
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Timing
When do major investment, working-capital or financing requirements arise?
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Decision trade-offs
Where does a stronger commercial outcome require greater cash, investment or risk?
The model starts with what the business knows
Good modelling requires clear inputs — not perfect certainty.
Management remains responsible for the factual inputs, assumptions and business decisions supplied for modelling.
Where information is uncertain, the model should make that uncertainty visible rather than hide it.
Depending on the assignment, TaxGraph may require:
- Historical financial statements
- Management accounts
- Sales or volume information
- Pricing assumptions
- Margins and cost information
- Operating expense assumptions
- Payroll/staffing plans
- Capex plans
- Working-capital information
- Financing terms/assumptions
- Management estimates
- Implementation timelines
- Other decision-specific operating information
What the engagement may produce
Outputs should be useful after the model is built.
A model that only its author can operate has limited value. What an engagement produces is agreed against the decision it supports.
Depending on scope:
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Financial model
A structured working model built around the agreed management question.
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Assumptions structure
Clearly identified key assumptions and drivers.
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Scenario / sensitivity views
Alternative cases showing how important changes affect the financial position.
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Decision outputs
Relevant projections and indicators such as cash requirement, profitability, working capital, financing requirement or other agreed measures.
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Management walkthrough
Explanation of the model structure, key assumptions and major outputs.
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Summary of key observations
Where appropriate, a concise summary of major model implications and sensitivities.
Exact deliverables are agreed before the project begins. Not every assignment requires every output above.
The engagement is normally project-based. Ongoing model updates, reforecasting or maintenance can be separately scoped where required.
Two connected but different requirements
Do you need to model a decision, or manage the financial plan of the business?
| Question | Financial Modelling | Business Financial Planning |
|---|---|---|
| Main question | What could happen under different assumptions? | How should the business plan and monitor its financial direction? |
| Typical trigger | Specific decision / scenario | Ongoing budgeting/planning requirement |
| Focus | Model relationships and consequences | Budgets, cash planning, forecasts and management planning |
| Engagement | Usually project-based | May be periodic / ongoing |
| Key output | Decision-oriented financial model | Financial plan / planning framework |
| Natural connection | Can reveal ongoing planning needs | May use models for specific decisions |
The two often lead into each other.
A decision model frequently surfaces a wider planning requirement, and an ongoing planning process frequently raises a specific decision worth modelling.
Start with the question you need answered now.
If the underlying need is continuing senior finance involvement rather than a specific model or planning cycle, that is a different kind of engagement. Fractional CFO Support→
Scope and limitations
A model is a decision tool, not a prediction.
Model outputs depend on the information and assumptions used. Actual results may differ materially from projections, and the model does not replace management judgement.
TaxGraph does not guarantee projected outcomes.
Work outside the agreed modelling scope should be separately identified and scoped.
Not automatically included:
- Valuation
- Transaction modelling
- Investment advisory
- Fundraising engagements
Before you get in touch
Frequently asked questions
It depends on the decision being modelled. Relevant information may include historical financial data, sales or volume information, margins, costs, working-capital assumptions, capex plans, financing information and management assumptions. The required inputs are identified when the scope is defined.
Not necessarily. The appropriate source information depends on the purpose of the model and what reliable business information is available. Any important limitations in the available information should be understood when the model is scoped.
Yes, where a monthly model is appropriate to the decision. The model horizon and frequency should follow the management requirement rather than a standard format.
Yes, where an integrated financial-statement model is appropriate. Not every assignment requires a fully integrated three-statement model.
Yes. Scenario analysis is an important part of Financial Modelling where management needs to understand how different assumptions affect the financial result.
Funding requirements can be modelled where the relevant operating, cash-flow, working-capital and financing assumptions form part of the scope. The result remains dependent on the assumptions used.
A modelling engagement may be appropriate where management needs to understand the economics, cash requirements or financial consequences of a proposed new activity or expansion. The scope depends on the information and assumptions available.
Valuation or transaction-specific modelling should be discussed separately. TaxGraph does not automatically include specialist valuation, transaction or investment-advisory work within a standard Financial Modelling engagement.
Ongoing updates, reforecasting or model maintenance can be separately scoped where required.
No. A financial model uses assumptions to explore potential outcomes. Actual business results may differ from the model.
The fee is scoped based on factors such as the decision being modelled, complexity, available data, modelling horizon, number of scenarios, integration requirements and expected outputs.
Start with the decision
Tell us what you are trying to understand.
You do not need to arrive with a finished model specification.
Tell us the decision management is considering, the information available and the questions you need the numbers to help answer.
We can then determine what should be modelled and what information will be required.