PROJECT FINANCE MODEL Name   https://www.financial-simulation.com        
INSTRUCTIONS
(This example is in US$ Thousand, except for the unit prices and cost which are in US$.)
Year 0 reflects the starting assumptions, which will be applicable starting in year 1.
Blue cells must be filled out by the user.
CALCULATION OF GROSS OPERATING MARGIN
A) Operating income:
Year 0 Year 1 Year 2 Year 3 Year 4 Year 5
Annual increase of the price
Annual increase of the volume
Income from sales of product A
Annual increase of the price
Annual increase of the volume
Income from sales of product B
Annual increase of the price
Annual increase of the volume
Income from sales of product C
TOTAL OPERATING INCOME
B) Expenses:
Year 0 Year 1 Year 2 Year 3 Year 4 Year 5
Annual increase of this cost
Total variable cost of product A 
Annual increase of this cost
Total variable cost of product B
Annual increase of this cost
Total variable cost of product C
Total variable cost from the products
Variable cost by royalty
Annual increase of these expenses
Total fixed expense
TOTAL OPERATING EXPENSE
GROSS OPERATING MARGIN
Annual increase
CALCULATION OF DEPRECIATION
 
Year 0 Year 1 Year 2 Year 3 Year 4 Year 5
Initial investment in fixed assets with a ten years depreciation
Depreciation term (years)
Initial investment in fixed assets with a five years depreciation
Depreciation term (years)
Total initial investment in fixed assets
Initial investment in the opening front fee which is paid to the franchisor
Depreciation term (years)
Initial investment in capitalized expenses
Depreciation term (years)
Total initial investment in capitalized expenses
Depreciation of fixed assets
Amortization of capitalized expenses
TOTAL AMORTIZATION EXPENSE
Evolution of fixed assets and capitalized expenses Year 0 Year 1 Year 2 Year 3 Year 4 Year 5
Gross fixed assets 
Accumulated depreciation
Net fixed assets 
Gross capitalized expenses
Accumulated amortization
Net capitalized expenses
DEBT SERVICE CALCULATION
 
Year 0 Year 1 Year 2 Year 3 Year 4 Year 5
Initial investment in fixed assets and capitalized expenses
Percentage to be financed by capital
Percentage to be financed by debt
Initial amount of debt
Repayment term (years)
Annual repayment
Amount of debt at year end
Average amount of debt
Reference interest rate (Euribor or other)
Spread
Interest rate of debt
Year 0 Year 1 Year 2 Year 3 Year 4 Year 5
Annual amount of interest
Annual debt service (principal + interest)
PROFIT AND LOSS STATEMENTS
 
Year 0 Year 1 Year 2 Year 3 Year 4 Year 5
Operating income
Operating expense
Operating gross margin
 - Depreciation
 - Interest
Profit before tax
(Tax rate)
 - Income tax
NET PROFIT
Percentage of increase
CALCULATION OF CASH FLOW FOR DEBT SERVICE
Year 0 Year 1 Year 2 Year 3 Year 4 Year 5
Operating gross margin
 - Income tax
 - Increase in working capital needs (WCN)
(WCN as a  % of operating income)
WCN
Calculation of WCN:
Cash needed for operations as a % of operating income
Cash needed for operations
Receivables as a % of operating income
Receivables
Stocks as a % of operating income
Stocks
Suppliers as a % of operating income
Suppliers
Cash flow available for debt service (CFD)
CALCULATION OF DEBT SERVICE COVERAGE RATIO (DSCR)
Year 0 Year 1 Year 2 Year 3 Year 4 Year 5
Cash flow available for debt service (CFD)
Annual debt service (DS)
DEBT SERVICE COVERAGE RATIO (DSCR)
BALANCE SHEET
 
BALANCE SHEET BEFORE DIVIDEND PAYMENT
Year 0 Year 1 Year 2 Year 3 Year 4 Year 5
Additional cash (if negative, it would represent additional debt)
Stocks
Current year profit
Accumulated reserves
CALCULATION OF DIVIDENDS PAYABLE
Year 0 Year 1 Year 2 Year 3 Year 4 Year 5
Cash flow available for debt service (CFD)
Annual debt service (DS)
CF available for dividends (CFDiv = CFD-DS)
Accumulated CFDiv 
Current year profit
Accumulated profit: limit for dividend payable
Accumulated dividend payable
Annual dividend payable
BALANCE SHEET AFTER DIVIDEND PAYMENT
Year 0 Year 1 Year 2 Year 3 Year 4 Year 5
Additional cash (to balance the figures)
Stocks
Reserves
CALCULATION OF NPV, IRR AND PAY-BACK TERM ACCORDING TO INVESTED CAPITAL AND DIVIDENDS PAYABLE 
(disregarding residual value of the project)
Year 0 Year 1 Year 2 Year 3 Year 4 Year 5
Invested capital
Annual dividends payable
Discount rate to be applied for NPV calculation
Discount factor for this rate
Discounted dividends
Present value of dividends
NPV of the investment
Year 0 Year 1 Year 2 Year 3 Year 4 Year 5
Investment schedulle
IRR OF THE INVESTMENT
 
Year 0 Year 1 Year 2 Year 3 Year 4 Year 5
Dividends payable
Accumulated dividends payable (A)
Invested capital (B)
Investment pay-back term
and
PROJECT SUMMARY SHEET: ASSUMPTIONS AND RESULTS
Name:
OPERATIONAL ASPECTS
Inflation assumptions for these initial estimations:
Starting volumes:
Year 1 Year 2 Year 3 Year 4 Year 5
Initial prices and costs:
ECONOMIC & FINANCIAL ASPECTS
Total investment
To be financed by capital
To be financed by debt
Term of the loan
Interest rate of the loan
Working capital needs as a  % of operating income
Discount rate applied for NPV calculation
RESULTS
Año 0 Año 1 Año 2 Año 3 Año 4 Año 5
Total operating income
Gross operating margin
Net profit
Cash flow available for debt service (CFD)
Annual debt service (DS)
Debt service coverage ratio (DSCR)
Annual dividends payable
NPV of invested capital
IRR of invested capital
Pay-back term of invested capital
and