2gnoMe Financial Model
Objective
The objective was to build a financial model to project 2gnoMe's future cash flows and present it to investors during a critical period when the company was facing losses exceeding $200K per year. The model aimed to demonstrate future growth potential and secure additional equity funding.
Role & Responsibilities
- Created a financial model to project future cash flows based on recent sales upticks and forecasted revenue growth.
- Collaborated with the finance and executive teams to ensure accurate representation of cash flow projections and realistic growth assumptions.
- Presented the model to potential investors, leading to successful fundraising efforts.
Process/Approach
- Modeled future cash flows by forecasting revenue, expenses, and cash outflows over the next five years.
- Incorporated a detailed sales pipeline analysis, projecting revenue growth from new contracts and customer retention.
- Included sensitivity analyses to show how variations in sales growth, customer acquisition costs, and churn rates would impact the company's financial health.
- Used the model to demonstrate how the uptick in recent sales could lead to a positive cash flow in the near future.
Key Metrics/Results
The model enabled 2gnoMe to secure $300K in equity funding, which provided the company with much-needed capital during a period of financial strain. The model also demonstrated that projected revenue could turn the company cash-positive within two years.
Challenges & Solutions
The biggest challenge was showing growth potential in the face of significant losses. By leveraging recent sales data and providing multiple growth scenarios, I was able to present a compelling case for future profitability despite current financial challenges.
Tools/Technologies Used
Excel for financial modeling, Tableau for data visualization, and internal CRM data for sales pipeline forecasting.
Clorox Model
Objective
The project aimed to determine whether Clorox stock was overvalued or undervalued by modeling predicted cash flows over the next 10 years using reinvestment rates. This model was part of a broader strategy to assess volatility across various industries and identify sectors with overvalued companies.
Role & Responsibilities
- Developed a discounted cash flow (DCF) model to predict Clorox's future cash flows and determine its net present value (NPV).
- Applied the same model to over 20 companies, including Apple and Microsoft, to analyze sector-specific volatility and valuation trends.
- Presented findings to the Orbital Capital team to aid in their volatility strategy.
Process/Approach
- Used historical financial data and reinvestment rates to project Clorox's cash flows over a 10-year period.
- Calculated a terminal value to estimate the company's worth beyond the forecast period.
- Compared the model's results across multiple industries to determine which sectors exhibited more overvaluation.
- Evaluated the sensitivity of the model to changes in growth rates and discount rates to refine the volatility strategy.
Key Metrics/Results
The model provided crucial insights into Clorox's valuation and was used to compare valuation trends across industries, forming a core part of the firm's volatility strategy. The model's results helped inform decisions regarding sector allocation and risk management.
Challenges & Solutions
A key challenge was accurately predicting reinvestment rates for highly variable industries. By using a multi-scenario analysis approach and stress-testing the model under different market conditions, I ensured more reliable results.
Tools/Technologies Used
Excel for financial modeling, Capital IQ for historical financial data, and Python for scenario analysis and sensitivity testing.