Modeldrill

Financial modeling, one page per calculation

The calculations behind a three-statement and DCF model, each with the direct answer, the formula in Excel terms, a worked example with numbers, the modeling mistakes that break models, and the Modeldrill exercises that practice it on a live sheet.

40 topics, each with the direct answer, syntax, worked examples, the mistakes people make and the drills that practice it. Updated November 2026.

Valuation

  • DCF model stepsThe six steps of a DCF: forecast unlevered free cash flow, set WACC, compute terminal value, discount it all, bridge to equity value and divide by shares.
  • Free cash flowFree cash flow is cash from operations minus capital expenditures. The simple formula, the free cash flow to equity version and examples with exact numbers.
  • Unlevered free cash flowUnlevered free cash flow = EBIT x (1 - tax rate) + D&A - capex - increase in net working capital. Examples from EBIT and from EBITDA, plus the sign rules.
  • WACCWACC = E/V x cost of equity + D/V x cost of debt x (1 - tax rate). Cost of equity from CAPM, market value weights, an example giving 9.0% and common errors.
  • Terminal valueTerminal value captures all cash flows after the forecast period. Perpetuity growth and exit multiple formulas with examples, and how to discount it right.
  • Gordon growth modelThe Gordon growth formula: TV = cash flow x (1 + g) / (r - g). Examples with exact results, how to pick the growth rate and the implied exit multiple check.
  • Exit multipleThe exit multiple method sets terminal value as final year EBITDA times a market multiple. Worked example, present value at WACC and the implied growth check.
  • Enterprise value to equity valueEquity value = enterprise value - debt + cash - preferred stock - minority interest. The EV to equity bridge step by step, with examples and per share value.
  • NPV in ExcelExcel NPV discounts every value one period, so the time zero investment goes outside the function: =NPV(rate, cash flows) + initial. Exact examples, errors.
  • IRR in ExcelIRR is the discount rate at which NPV equals zero. How =IRR(values) works in Excel, exact worked examples, the guess argument, MIRR and fixing #NUM! errors.
  • XNPV and XIRRXNPV and XIRR discount cash flows on their real dates using a 365-day year, with the first date as time zero. Syntax, exact worked examples and common errors.
  • Discount factorA discount factor converts a future cash flow into present value: DF = 1 / (1 + r)^t. Worked examples, the Excel formula with absolute references, mid-year.
  • Mid-year conventionThe mid-year convention discounts each year at t - 0.5 because cash arrives through the year. Formula, an Excel switch, effect on terminal value and examples.

Revenue and costs

  • EBITDAEBITDA = EBIT + depreciation and amortization, or net income + interest + taxes + D&A. Exact worked examples, what EBITDA leaves out and the usual mistakes.
  • EBITDA marginEBITDA margin = EBITDA / revenue, the share of each sales dollar left as operating profit before D&A. Formula, exact examples, what is a good margin, errors.
  • Gross marginGross margin = (revenue - COGS) / revenue. The formula, worked examples with exact percentages, the difference between margin and markup and common mistakes.
  • Revenue growth and CAGRCAGR = (end value / start value)^(1 / years) - 1, or =RRI(years, start, end) in Excel. Year over year growth, exact examples and the off-by-one trap in n.
  • COGS as a percent of revenueCOGS % = cost of goods sold / revenue, and forecast COGS = revenue x COGS %. How to compute the historical ratio, project it and link it to gross margin.
  • Operating leverageDegree of operating leverage = contribution margin / EBIT = % change in EBIT / % change in sales. An example where a 10% sales rise lifts EBIT 40%, and why.

Three statements

  • Depreciation scheduleHow to build a depreciation schedule: straight-line = (cost - salvage) / life, Excel SLN and DDB functions, depreciation from the purchase year, waterfalls.
  • PP&E roll-forwardThe fixed asset roll-forward links the balance sheet to capex and depreciation: closing PP&E = opening + capex - depreciation - disposals. Example and layout.
  • Working capital daysDSO = receivables / revenue x 365, DIO = inventory / COGS x 365, DPO = payables / COGS x 365. Compute the days, forecast balances and get the cash cycle.
  • Change in net working capitalChange in NWC = NWC this year - NWC last year. An increase uses cash and is subtracted in free cash flow; a decrease releases cash. Formula, examples, signs.
  • Cash flow from operationsCFO = net income + D&A + other non-cash charges - increase in working capital. How the indirect method works line by line, a worked example and sign errors.
  • Tax schedule with NOLsHow to model income tax that is only paid on profits, with net operating losses carried forward to shield future income. MAX and MIN formulas and an example.
  • EBITDA to net incomeNet income = EBITDA - D&A - interest - taxes. Each step of the bridge (EBIT, EBT, tax at the rate, net income) with exact numbers and the tax-on-losses rule.
  • Three-statement modelHow a three-statement model links net income, depreciation, capex, working capital, debt and cash so the balance sheet balances. Build order, links, check.
  • Circular referencesInterest on the average debt balance makes a model circular. How to enable iterative calculation in Excel, add a circularity switch and fix a broken model.

Debt and cash

  • Debt scheduleA debt schedule rolls each loan forward: closing = opening + draws - repayments, with interest on the opening balance. Layout, example, amortization, sweeps.
  • RevolverA revolver draws when cash falls below the minimum and repays from excess cash. The MIN and MAX formula, a two-year worked example and avoiding circularity.
  • Interest on the opening balanceInterest = rate x opening balance avoids a circular reference; rate x average balance is more accurate but circular. Both formulas, an example, when to use.
  • PMT, IPMT and PPMTPMT gives the level loan payment; IPMT and PPMT split it into interest and principal for any period. Syntax, sign conventions and examples with exact results.
  • Amortization tableA loan amortization table shows opening balance, payment, interest, principal and closing balance per period. How to build it with PMT, exact rows, mistakes.
  • DSCRDSCR = cash flow available for debt service / (interest + principal). How lenders compute it, exact examples, typical covenant levels and sizing debt from it.

Returns and scenarios

  • Sensitivity tableHow to build a sensitivity table with Data, What-If Analysis, Data Table: layout, row and column input cells, exact NPV examples and fixing wrong results.
  • Scenario switchBuild a scenario selector so one cell switches the model between base, upside and downside: =CHOOSE(case, ...) or =INDEX(range, MATCH(name, names, 0)).
  • Break-even pointBreak-even units = fixed costs / (price - variable cost per unit); break-even revenue = fixed costs / contribution margin ratio. Examples, margin of safety.
  • Payback periodPayback period = years before full recovery + unrecovered amount / cash flow in the recovery year. Simple and discounted versions, exact examples, formula.
  • CAC and LTVCAC = sales and marketing spend / new customers; LTV = ARPU x gross margin / churn rate. Examples giving LTV to CAC of 4.8 and a 4.2 month payback, errors.
  • Cohort analysisA cohort analysis groups customers by start month and tracks retention, revenue and cumulative contribution over time. Layout, retention formula and payback.

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Every topic here links to drills that check your answer on live data. All of them are free to try.

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