In a financial model it is common to see measures of profitability averaged historically and projected forward. This is, after all, the manner in which building a five-year projection is presented in Integrating Financial Statements on this website. As an introduction to financial modeling this is a suitable approach, but as you graduate from projections built off of fictional historical data to real-world modeling exercises, attention should be paid to the detail that comprises expenses.
Note: I thought it would be a good idea to start posting answers to questions I receive via email. I try to answer all of them but occasionally my job gets in the way…
This question refers to the video titled “Integrating Financial Statements.”
I can no longer help but post simple descriptions when I stumble upon them in periodicals I read regularly. This explanation of capital and the helpful image “How to Make a Capital Cushion” (above) come from Bloomberg Business week:
Professor Aswath Damodaran recently posted an article titled “Stock Buybacks: They are big, they are back and they scare some people!”. Per his comments: