Adam Bede

    Intro to Financial Modeling

    • Rev - COGS = Gross Profit
    • Gross Profit - SG&A = EBITDA
    image

    Blue: Inputs / Hardcodes (Universal Standard)

    • Meaning: These cells contain raw numbers typed manually (e.g., 100, 5.0%).
    • The Rule: "Change me." These are the only cells a user should interact with to run scenarios.
    • Why: If a cell is blue, you know it’s safe to overwrite it without breaking a formula elsewhere in the model.

    2. Black: Formulas / Calculations (Universal Standard)

    • Meaning: These cells contain equations (e.g., =A1+B1 or SUM(A1:A10)).
    • The Rule: "Don't touch." Changing a black cell destroys the logic of the model.
    • Why: It signals that the number is a result, not an assumption.

    3. Purple: The "Mixed" or "Special" Case (Common Variation)

    • Meaning: Your image defines this as a "Mix of Historical (inputs) and projected data." This is a sophisticated variation used when a single row acts as both.
    • Scenario: Imagine a row for "Revenue."
      • 2023 (Past): Hardcoded (Actual data).
      • 2024 (Future): Formula (Growth rate assumption).
      • Since the row contains both types, coloring the font purple signals: "Be careful; some of this is real data, some is calculated."
    • Note: In other conventions, Green is often used here instead to denote links to other worksheets, or Red to denote links to external files.

    Using our 1st Financial Model