financial-modeling

Financial Modeling

Structured approach to building defensible financial models for consulting deliverables.

When to use

• Three-statement models (P&L + Balance Sheet + Cash Flow)
• DCF valuation (enterprise value, equity value, sensitivity)
• LBO models (M&A, leveraged transactions, returns analysis)
• Project finance models (CFADS, DSCR, debt sizing, equity IRR)
• Model audits (peer review of client-provided models)

Modeling principles (CPS standards)

1. Inputs separated from calculations — colored cells (blue inputs, black calcs, green outputs)
2. One formula per row, copied across — no hard-coding mid-formula
3. Named ranges for key drivers — readable formulas
4. Sign convention consistent — outflows negative, inflows positive
5. Sources documented — every input has a comment with source and date
6. Sensitivity-ready — all key drivers exposed in the inputs sheet
7. Audit trail — version history at the top of the model

Standard tabs

Tab	Purpose
Cover	Project name, version, author, date, contact
Assumptions	All inputs (CAPEX, OPEX, prices, volumes, financing)
Calcs	Year-by-year P&L, BS, CF (or CFADS for project finance)
Outputs	NPV, IRR, payback, DSCR, key ratios
Sensitivity	Tornado data, scenario table
Charts	Output visualizations (linked to outputs)

Three-statement integrity checks

• Net income flows to Retained Earnings on BS
• CapEx flows to PP&E on BS, depreciation on P&L, investing CF
• Debt issued/repaid flows to BS Debt and financing CF
• BS balances every year (Assets = Liabilities + Equity)
• Cash on BS = Cash on CF statement
• EBITDA → Net Income reconciliation visible

Project finance specifics

• CFADS — Cash Flow Available for Debt Service = EBITDA – Tax – Working Capital – CapEx
• DSCR — CFADS / (Interest + Principal); track yearly, report minimum
• LLCR / PLCR — Loan Life Cover Ratio / Project Life Cover Ratio
• Debt sculpting — repayment schedule shaped to maintain target DSCR

Slash commands

• /cps-fin:sensitivity — exercise the model under sensitivity stress
• /cps-fin:scenarios — compare discrete cases
• /cps-fin:breakeven — identify covenant breach thresholds

Quality checklist

• Cover page filled (project, version, date, author)
• All inputs sourced with comments
• Three-statement integrity checks pass
• Outputs match agreed base case
• At least 3 scenarios modeled
• Charts use CPS branding
• Peer reviewed (initials and date on cover)

References

• plugins/core/assets/CPS_METHODOLOGY.md — quality standards
• plugins/finance/skills/sensitivity-analysis/SKILL.md — companion skill

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Additional Skill: working-capital-optimization

Command: /cps-skills:working-capital-optimization (v4.2.1)

Purpose

Optimize working capital across receivables, inventory, payables; quantify cash release.

Inputs required

client:
  name: "Client Name"
context:
  scope: "in-scope description"
  constraints: ["regulatory / commercial constraints"]

Methodology

1. Frame the request against Financial Advisory domain conventions.
2. Pull required inputs from engagement brain and external sources.
3. Apply the working-capital-optimization method using the relevant subagent.
4. Synthesize into deliverable with recommendations + risks.
5. Validate via /cps:verify-quality.

Output shape

CPS-branded working-capital-optimization deliverable in 05_Deliverables_Final/.

Quality checklist

• Pyramid Principle structure
• Source citations on all data
• Quantified impact where the analysis supports it

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Additional Skill: capital-allocation

Command: /cps-skills:capital-allocation (v4.2.1)

Purpose

Frame capital allocation choices: organic growth, M&A, buybacks, dividends; ROIC threshold.

Inputs required

client:
  name: "Client Name"
context:
  scope: "in-scope description"
  constraints: ["regulatory / commercial constraints"]

Methodology

1. Frame the request against Financial Advisory domain conventions.
2. Pull required inputs from engagement brain and external sources.
3. Apply the capital-allocation method using the relevant subagent.
4. Synthesize into deliverable with recommendations + risks.
5. Validate via /cps:verify-quality.

Output shape

CPS-branded capital-allocation deliverable in 05_Deliverables_Final/.

Quality checklist

• Pyramid Principle structure
• Source citations on all data
• Quantified impact where the analysis supports it