Model won't balance. Any help?
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I think it would be easier for people to help if you made your model easier to read. Right now, everything in there is black. Impossible to figure out without going through each individual cell.
It helps a lot for your own doublechecking to do this, as well. Try this: blue for inputs, black for formulas, green for any cell or sheet references. You can add a fourth color like purple in the future for cells with relevant formulas (if you use a calculations sheet).
Funny you say that, I did that the minute I opened it.
a few things look screwed up at first glance. I would encourage you to think through each line on the cash flow statement and think about what changes on the balance sheet as a result. first, it looks like you have $250 of debt maturing in 2014 that i don't see being reflected on the CFS (maybe I missed it). Also you are showing proceeds from asset sales under investing activities, but I'm failing to see how this ties into PP&E. Associated with the assets sold should be selling off a certain amount of net book value that will need to be reflected in PP&E. I don't see that happening. I certainly don't think this is a quick-fix issue, looks like some of the key fundamentals in this model are just off.
Also, you should find a model with a good debt schedule - see an LBO model somewhere, because yours, frankly, doesn't make a lot of sense.
This.
Here OP:
http://macabacus.com/lbo-model/introduction
Thanks for the link
Yikes man. See a lot of things that don't look right either. As your model's running now your cash available to paydown debt amort. is negative, that means you need to be drawing down on your revolver / credit facility to cover.
Also, idk what you're going for (know you're not asking about this) but that's not how you model an E&P company. Sent you a PM.
Read and study his PM. How am I looking at a model for Hess projected out several years without any explicit mention of production growth on a boe basis and commodity prices? Sorry if I missed it but I looked at every tab. Where are you coming up with your projected net income figures? Maybe you have some of this going on behind the scenes but an E&P Model is nearly worthless if you don't have those as variable inputs that can drive the model. Also, in my opinion no model is complete without an NAV in this industry. Take a look at the reserves in the 10-K, slap a multiple that makes sense on their midstream/downstream etc.
Updated with revisions.
The balance is off by 433 increments. Any tips would be greatly appreciated.
Thanks!
Your model is not balancing because your CF statement is completely screwed.
You are adding back a whole host of adjustments that have no corresponding BS movement. You can't just randomly throw cash around on your CF statement, make no changes to your BS and expect it to balance. Go through CF and think about what is and isn't moving on the BS.
e.g: - CF, row 11: You need to impair assets as this is non cash - CF, row 12-14: You are adding back items to Net Income, ok, so what are you moving on the BS to compensate for these? Equity is still going up by net income, so you need to either increase assets or decrease liabilities. - CF, row 31: These dividends aren't flowing to change in equity - etc
Also, your DS is screwed. Check out your average calculations...
To debug, try this:
Why not use an existing template like the one I linked?
Also, your DCF has terminal year FCF jumping 71% because, among other things, your D&A=Capex. That's not realistic.
also put some thought into user interface and ease of use as this thing is a pain to audit. why empty columns between years?
FYI, your NCI payments and stock option exercises arent linked to the equity portion of your BS. This doesnt account for your entire 433, but it accounts for part of it (im sure theres a few more cashflow items that arent linked up).
Why are there empty columns between the years? Did you manually do every formula (i.e. =[prior year]+1 for each year cell) or did you set it up properly (i.e. =[prior year]+1 and drag it over) and then insert the columns? Regardless, there is no need for the extra space.
Also, why is the risk-free rate 5.5%?
Aside from all the CF/BS changes mentioned above, you also need to fix the sign in your calculation in Row 38 on the Balance Sheet (where you account for the dividends). As you have it now, dividends are being added to retained earnings instead of subtracted. This, along with the changes mentioned above, should balance the model.
I would Have just posted that !
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