Financial Planning & Analysis
At its core, financial planning and analysis (FP&A) involves leveraging data and trends to help business leaders answer critical questions and achieve their goals. Below are some examples of common FP&A questions:
- How many more months can we continue to operate before we need to begin fundraising?
- How much profit can we distribute as dividends while retaining sufficient cash to achieve our goals?
- What earnings guidance should we establish in our quarterly earnings report?
- Under what conditions should we hire an additional sales representative?
- How much inventory should we purchase monthly to minimize waste and storage costs?
- How should we price our products to optimize profits?
We have helped clients address these and many other questions. Although each client has unique needs and circumstances, our approach consistently involves forecasting the following:
- Liquidity/Cash Position
- Corporate Earnings
- Intrinsic Valuation
For client engagements, we typically develop detailed models to forecast these items over 18 to 36 months. Our models are fully dynamic, incorporating functionality to evaluate multiple scenarios across various input variables. While we can develop models that evaluate thousands of scenarios (e.g., for Monte Carlo simulations), we usually use 4 or 5 scenarios to ensure the analysis is digestible and actionable for executive decision-making.
