Income Statement With Ebitda: Fill & Download for Free

Twitter's financial growth is remarkable.The 5-year forecast below (2012-17) is from one research report I came across. (You'll need to click on it to see it clearly; it's really good - I recommend checking it out.)According to this projection, Twitter's income statement is:2012: $317mm of revenues; $21mm of Adjusted EBITDA2013 estimates: $606mm of revenues, $62mm of Adj EBITDA2015 projections: $1.88B of revenues; $343mm of Adj. EBITDANotes: SBC = Share-based compensation. Amounts are expressed in millions (except for per share data), not thousands, as noted

I just finished an article on this topic for Business Plan Ninja, so I'll post it here to give you a clear answer:This is a good question, and an important one. On a company’s Income Statement, or Profit and Loss Statement, each expense category is accounted for separately. The expenses are grouped together in two primary sections: Direct Costs (or Costs of Goods Sold) and SG&A (Sales, General, and Administrative, or Operating Costs).What are Direct Costs and What is Gross Profit?Direct Costs are so-called because they are directly related to revenue. For example, if you own a car dealership, and you make $5k in revenue for each car you sell, you have to account for the $3k you pay to the manufacturer for the car. That $3k you’re paying for the car you’re selling is a Direct Cost, so you account for it in the section called Direct Costs, or Costs of Goods Sold. Then, if you subtract the cost of the car and any other Direct Costs from your Revenue, you get your Gross Profit or Gross Margin.What is SG&A?SG&A expenses are those that don’t directly relate to revenue. So in a car dealership, on top of the Direct Cost generated when you sell each car, you have to account for the salaries you pay to your sales staff, the rent you pay for the lot, and the electricity you use to keep the lights on. All these expenses that you’ll have to pay whether or not you sell a single car go into SG&AWhen you total up the SG&A expenses, you know what it costs to operate your business. If you then subtract SG&A from Gross Profit, you get Earnings, because you’ve accounted for all the costs.What is EBITDA?There are actually a few more expenses that don’t really belong in either category, though sometimes they get folded into SG&A. These expenses are Interest, Taxes, Depreciation, and Amortization. These are all accounted for separately, because they’re not really representative of the fundamental health of the business. Investment Bankers will often use a term for earnings called EBITDA - Earnings Before Interest, Taxes, Depreciation, and Amortization. What’s great about EBITDA is it lets you have an idea of the earnings of a business independent of its capital structure.Of course, if you add all of those back in, you get from EBITDA to Net Income. So you’ve gone from the top of the Income Statement with Revenue to the bottom with Net Income.

Financial modeling is an iterative process. You have to chip away at different sections until you’re finally able to tie it all together.Below is a step-by-step breakdown of where you should start and how to eventually connect all the dots. For much more detailed instruction, and to work through your own Excel model.1. Historical results and assumptionsEvery financial model starts with a company’s historical results. You begin building the financial model by pulling three years of financial statements and inputting them into Excel. Next, you reverse engineer the assumptions for the historical period by calculating things like revenue growth rate, gross margins, variable costs, fixed costs, AP days, inventory days, and AP days, to name a few. From there you can fill in the assumptions for the forecast period as hard-codes.2. Start the income statementWith the forecast assumptions in place, you can calculate the top of the income statement with revenue, COGS, gross profit, and operating expenses down to EBITDA. You will have to wait to calculate depreciation, amortization, interest, and taxes.3. Start the balance sheetWith the top of the income statement in place, you can start to fill in the balance sheet. Begin by calculating accounts receivable and inventory, which are both functions of revenue and COGS as well as the AR days and inventory days assumptions. Next, fill in accounts payable which is a function of COGS and AP days.4. Build the supporting schedulesBefore completing the income statement and balance sheet you have to create a schedule for capital assets like Property, Plant & Equipment as well as for debt and interest. The PP&E schedule will pull from the historical period and add capital expenditures and subtract depreciation. The debt schedule will also pull from the historical period and add increases in debt and subtract repayments. Interest will be based on the average debt balance.5. Complete the income statement and balance sheetThe information from the supporting schedules completes the income statement and balance sheet. On the income statement, link depreciation to the PP&E schedule and interest to the debt schedule. From there you can calculate earnings before tax, taxes and net income. On the balance sheet link the closing PP&E balance and closing debt balance from the schedules. Shareholder’s equity can be completed by pulling forward last year’s closing balance, adding net income and capital raised and subtracting dividends or shares repurchased.6. Build the cash flow statementWith the income statement and balance sheet complete, you can build the cash flow statement with the reconciliation method. Start with net income, add back depreciation and adjust for changes in non-cash working capital, which results in cash from operations. Cash used in investing is a function of capital expenditures in the PP&E schedule and cash from financing is a function of the assumptions that were laid out about raising debt and equity.7. Perform the DCF analysisWhen the three statement model is completed it’s time to calculate free cash flow and perform the business evaluation. The free cash flow of the business is discounted back to today at the firm’s cost of capital (its opportunity cost, or required rate of return).8. Add sensitivity analysis and scenariosOnce the DCF analysis and valuation sections are complete, it’s time to incorporate sensitivity analysis and scenarios into the model. The point of this analysis is to determine how much the value of the company (or some other metric) will be impacted by changes in underlying assumptions. This is very useful for assessing the risk of an investment or for business planning purposes (i.e. does the company need to raise money if sales volume drops by x percent?).9. Build charts and graphsClear communication of results is something that really separates good from great financial analysts. The most effective way to show the results of a financial model are thought charts and graphs. Most executives don’t have the time or patience to look at the inner workings of the model, so charts are much more effective.10. Stress test and audit the modelWhen the model is done your work is not over. Next, it’s time to start stress testing extreme scenarios to see if the model behaves as expected. It’s also important to use the auditing tools to make sure it’s accurate and the Excel formulas are all working properly.For more information go through the source: Overview of Financial Modeling - What is Financial Modeling