Leasing Company 5-Year Financial Projection Model

Description
PURPOSE OF MODEL


A leasing company specializes in providing assets or property to individuals or businesses for a specified period, typically in exchange for regular payments. These assets can include vehicles, equipment, real estate, or even technology. Rather than purchasing an item outright, leasing allows the lessee (the person or entity using the asset) to use it for an agreed-upon duration by making regular payments to the lessor (the leasing company). At the end of the lease term, the lessee can often choose to return the asset, renew the lease, or sometimes even purchase the asset at an agreed-upon price.


Our highly versatile and user-friendly Excel model allows for the preparation a of 5-year rolling 3 statement (Income Statement, Balance Sheet and Cash flow Statement) financial projection with a monthly timeline for a startup or existing business leasing company borrowing funds to purchase assets to lease, leasing out these assets and investing any surplus funds in financial investments.


The model applies IFRS 16 methodology to project both finance leases (10 categories) and operating leases (10 categories) each with their own lease volumes, costs, fair values, direct costs, monthly lease payments, durations, credit losses, residual values and useful life.


The model also includes interest-bearing liabilities, financial investments, fixed assets, other borrowings, staff costs, marketing costs, other administrative costs, taxes, equity additions and dividend distributions.


The model follows good practice financial modelling principles and includes instructions, line-item explanations, checks and input validations.




KEY OUTPUTS


The key outputs include:
- Projected full financial statements (Income Statement, Balance Sheet and Cash flow Statement) presented on a monthly basis across 5 years and summarised on an annual basis.
- Dashboard with:
o Summarised projected Income Statement and Balance Sheet;
o Compounded Annual Growth rate (CAGR) for each summarised income statement and Balance Sheet line item;
o List of key ratios including average return on assets and equity, average debt to equity ratio and equity to liability ratios.
o Bar charts summarising income statement and Balance Sheet projections;
o Chart/tables presenting income, expenses, balances and volumes by leasing category.




KEY INPUTS


Inputs are split into Income Statement and Balance Sheet Inputs. Most inputs include validations to help users understand what the input is for and populate correctly.


Setup Inputs:
- Name of business;
- Currency;
- First projection year and month;
- Naming for finance and operating lease categories, interest-bearing liabilities, financial investments, staff cost categories, marketing cost categories, admin expense categories, fixed asset categories and borrowings;


Actuals Inputs:
- Opening balance sheet (for existing businesses);
- Income Statement actuals (for trend analysis);


Projection Inputs:
- Finance Leases
o Cost of leased asset at commencement
o Fair value of leased asset
o Initial direct costs of lease
o Residual value of leased asset
o Monthly lease payments
o Duration of lease
o Expected credit losses
o Volume of lease additions
- Operating Leases
o Cost of leased asset at commencement
o Useful Life
o Monthly lease payments
o Average lease utilisation over useful life
o Expected credit losses
o Volume of lease additions
- Interest-bearing liability expenses
o Additions/repayments
o Interest rates
- Financial investments
o Target cash balances
o Investment return per annum
o Investment allocation percentages
- Staff Costs including:
o Staff numbers;
o Average Annual cost per staff member;
o Average employer’s payroll taxes as % of salary;
o Average annual bonus;
o Average healthcare benefits per staff member;
- Other cost inputs including
o Marketing costs;
o Staff costs;
o Admin expenses.
- Sales tax and corporate tax inputs including rate and payment periods;
- Dividend inputs including amount or percentage of retained earnings and frequency;
- Fixed Assets including addition amounts and useful life;
- Borrowings including addition/redemption amounts and interest rate;
- Share Capital additions.




MODEL STRUCTURE


The model comprises of 9 tabs split into input ('i_'), calculation ('c_'), output ('o_’) and system tabs. The tabs to be populated by the user are the input tabs ('i_Setup', ‘i_Actuals’ and 'i_Assumptions'). The calculation tab uses the user-defined inputs to calculate and produce the projection outputs which are presented in 'o_Fin Stats', ‘o_Dashboard’ and ‘o_DCF’.


System tabs include:
- A 'Front Sheet' containing a disclaimer, instructions and contents;
- A Checks dashboard containing a summary of checks by tab.




KEY FEATURES


Other key features of this model include the following:
- The model follows best practice financial modelling guidelines and includes instructions, line-item explanations, checks and input validations;
- The model is not password protected and can be modified as required following download;
- The model contains a dynamic timeline that allows for a mix of actual and forecast period across a 5-year period allowing projections to be rolled forward from month to month;
- Timeline is split on a monthly basis and summarised on an annual basis;
- Costs are split into: direct and non-direct for better driver-based forecasting;
- The model allows for the following number of underlying categories for each line item (these can be easily expanded if required):
o Finance lease categories – 10 categories;
o Operating lease categories – 10 categories
o Interest-bearing liability categories – 10 categories;
o Financial investments – 5 categories;
o Staff costs – 8 categories;
o Marketing costs – 5 categories;
o Admin expenses – 15 categories;
o Fixed Assets – 5 categories;
o Borrowings – 3 facilities;
- Apart from projecting revenue and costs the model includes the possibility model fixed assets, borrowings, dividends, corporate tax and sales tax;
- The model included an integrated discounted cash flow valuation using the projected cash flow outputs;
- Business name, currency, starting projection period are fully customisable;
- Revenue, cost, fixed asset and borrowing category descriptions are fully customisable;
- The model includes instructions, checks and input validations to help ensure input fields are populated accurately;
- The model includes a checks dashboard which summarises all the checks included in the various tabs making it easier to identify any errors.




MODIFICATIONS


If you require any be-spoke modifications to the tool, we are more than happy to assist with this. Please send us a private message or contact us on: [email protected]




ABOUT PROJECTIFY


We are financial modelling professionals with experience working in big 4 business modelling teams and strong experience supporting businesses with their financial planning and decision support needs. Our aim is to provide robust and easy-to-use tools that follow good practice financial modelling guidelines and assist individuals and businesses with their financial projection and analysis requirements.


We are keen to ensure our customers are satisfied with the models they purchase and will be more than happy to assist with any questions or support required.


We are also always keen to receive feedback so please do let us know what you think of our models by sending us a message or submitting a review.