# Financial Modeling > When to activate: financial model, P&L, cash flow projection, unit economics, SaaS metrics, ARR, MRR, churn, scenario analysis, sensitivity table, revenue forecast - Skill: `mattakushi432/financial-modeling` (Agent Skill) - Install (CLI): `npx skillmds@latest add mattakushi432/financial-modeling` - Raw SKILL.md: https://api.skillmd.com/api/skills/mattakushi432/financial-modeling/raw - Safety review: pending - Works with: Claude Code, Claude.ai, OpenAI Codex - Category: AI & ML - Author: Mattakushi432 (https://skillmd.com/u/mattakushi432) - Updated: 2026-09-17 - Page: https://skillmd.com/skills/mattakushi432/financial-modeling --- # Financial Modeling ## Model Architecture ### Tab Structure (Standard) ``` 1. Assumptions ← All inputs in one place 2. Revenue ← Top-line build 3. COGS ← Direct costs 4. OpEx ← Operating expenses by department 5. P&L ← Summary income statement 6. Cash Flow ← Cash movements 7. Balance Sheet ← Assets / liabilities 8. KPIs ← Dashboard metrics 9. Scenarios ← Base / bull / bear 10. Sensitivity ← Two-variable tables ``` **Rule**: Never hardcode numbers in formula cells. Every number must trace to Assumptions tab. --- ## P&L Structure ``` Revenue - New ARR (new logos × ACV) - Expansion ARR (upsell + cross-sell) - Churned ARR (logo churn × ACV) = Net New ARR + Beginning ARR = Ending ARR ÷ 12 = MRR COGS - Hosting / infrastructure - Customer success salaries (if included) - Professional services = Gross Profit Gross Margin % = Gross Profit / Revenue Operating Expenses - Sales & Marketing (S&M) - Research & Development (R&D) - General & Administrative (G&A) = Total OpEx EBITDA = Gross Profit - OpEx EBITDA Margin % = EBITDA / Revenue ``` --- ## SaaS Metrics ### ARR / MRR ``` ARR = MRR × 12 MRR = sum of all active subscription monthly values Net Revenue Retention (NRR) = (Beginning MRR + Expansion - Contraction - Churn) / Beginning MRR Gross Revenue Retention (GRR) = (Beginning MRR - Contraction - Churn) / Beginning MRR Target benchmarks: NRR > 120% = Excellent (enterprise) NRR > 110% = Good (mid-market) NRR > 100% = Acceptable (SMB) GRR > 90% = Healthy ``` ### Churn ``` Logo Churn Rate = Churned Customers / Beginning Customers Revenue Churn Rate = Churned MRR / Beginning MRR Monthly Churn → Annual Churn: 1 - (1 - monthly_churn)^12 Acceptable ranges: Enterprise SaaS: < 5% annual logo churn Mid-market: < 10% annual logo churn SMB: < 20% annual logo churn ``` --- ## Unit Economics ### CAC (Customer Acquisition Cost) ``` Blended CAC = (S&M spend in period) / (New customers acquired in period) Fully-loaded CAC includes: - Sales salaries + commissions + benefits - Marketing spend (paid, events, content) - Marketing tools and tech stack - Sales tools (CRM, enrichment, sequencing) - Allocated overhead (rent, IT) Payback Period (months) = CAC / (ACV/12 × Gross Margin %) Target: < 18 months (SaaS), < 12 months (high-velocity) ``` ### LTV (Lifetime Value) ``` LTV = ACV × Gross Margin % / Annual Churn Rate Example: ACV = $24,000 Gross Margin = 75% Annual Churn = 10% LTV = $24,000 × 0.75 / 0.10 = $180,000 LTV:CAC Ratio: > 3x = Healthy > 5x = Strong < 2x = Unsustainable — fix CAC or churn first ``` --- ## Cash Flow Projection ### Direct Method (13-Week Rolling) ``` Week | Beginning Cash | Cash In | Cash Out | Ending Cash -----|----------------|---------|----------|------------ 1 | $500,000 | $45,000 | $80,000 | $465,000 2 | $465,000 | $20,000 | $75,000 | $410,000 ... Cash In: + Customer collections (invoiced - DSO adjustment) + New bookings (when paid, not when signed) + Financing proceeds Cash Out: - Payroll (bi-weekly) - Vendor payments (net-30 cycle) - Rent / utilities - One-time expenses ``` ### Runway Calculation ``` Monthly Burn = Total Cash Out (operating, not financing) Net Burn = Monthly Burn - Monthly Revenue Collected Runway = Cash Balance / Net Burn Rate Include in burn: all operating expenses + capex Exclude from burn: loan repayments (those reduce cash but aren't burn) ``` --- ## Scenario Analysis ### Three-Scenario Template ``` Assumption | Bear | Base | Bull --------------------|-------|-------|------ New logos/month | 5 | 10 | 18 ACV ($) | 18K | 24K | 30K Gross margin | 68% | 75% | 78% Annual churn | 15% | 10% | 6% S&M as % revenue | 55% | 40% | 32% ``` **Methodology**: Hold one variable fixed, flex others proportionally. Name scenarios after a business assumption, not just "optimistic" — e.g., "Enterprise Pivot" vs "SMB Focus". --- ## Sensitivity Table (Two-Variable) ``` Annual Churn Rate ACV 5% 10% 15% 20% 25% $15,000 $225K $112K $75K $56K $45K ← LTV $24,000 $360K $180K $120K $90K $72K $36,000 $540K $270K $180K $135K $108K $48,000 $720K $360K $240K $180K $144K ``` Build in Excel/Sheets using `DATA TABLE` (two-variable) or Google Sheets `TABLE`. --- ## Key Benchmarks (SaaS 2024) | Metric | Seed | Series A | Series B | Public | |--------|------|----------|----------|--------| | ARR Growth | > 2x | > 2x | > 80% | > 30% | | Gross Margin | > 60% | > 65% | > 70% | > 75% | | Magic Number | > 0.5 | > 0.75 | > 1.0 | > 1.0 | | Burn Multiple | < 3x | < 2x | < 1.5x | < 1x | | NRR | > 100% | > 110% | > 115% | > 120% | **Magic Number** = Net New ARR / Prior Quarter S&M Spend **Burn Multiple** = Net Burn / Net New ARR --- ## Model Checklist - [ ] All inputs in dedicated Assumptions tab with units labeled - [ ] No hardcoded numbers in formula cells - [ ] Revenue tied to cohort model (not top-down only) - [ ] Cash flow ties to P&L (net income + non-cash ± working capital) - [ ] Three scenarios modeled (base, bull, bear) - [ ] Sensitivity table on two key drivers - [ ] Monthly for Year 1-2, quarterly for Year 3-5 - [ ] Actuals vs forecast variance tracking built in - [ ] Circular reference check (audit → trace precedents) - [ ] Assumptions sourced and dated in comments