Financial Model



Introduction

Purpose
The financial model presented in Railway Reform — Toolkit for Improving Rail Sector Performance demonstrates some key assumptions in developing financial modeling for railway operations and how financial and operational results could be presented (Figure 1). The target audience includes railway professionals in public and private entities, government agencies, and international organizations. The approach selected here is one of many potential variations of financial modeling; it is neither superior nor universal, just a point of departure for learning.



User requirements
Model users should be proficient in Microsoft Excel and financial analysis of railway operations. More experienced financial modelers can calibrate the model to their specific needs, and with practice, even novice users can learn model structure and logic.

Basic steps
This model includes no default values or data from an existing railway entity; instead, model users are expected to have access to recent financial and operational data for the entity they are examining. To begin, model users define the railway entity and enter all available historical financial and operational data, plus assumptions (Figure 2). The model will then generate a set of results, including forecast financial statements, charts, and ratio analysis. Also, the model includes a tool for model users to test a range of scenarios by changing key variables.



    
Copyright ©  The World Bank. All Rights Reserved.