Financial Forecasting Models

Historically, the Financial Planning & Analysis (FP&A) at Kabam Games focused primarily on preparing income statement forecasts. However, during the budget cycle, the parent company mandated that Kabam must deliver a comprehensive five-year forecast comprised of the income statement, balance sheet, and cash flow statement. Attempts to develop these models on short notice within the existing financial planning system were not successful. Faced with a tight deadline of one month, the task was to devise a solution to meet this expansive requirement.

To tackle this challenge, Sven embarked on a detailed analysis of Kabam’s monthly financial statements to grasp the nuances of account characteristics and their interrelationships. Based on this analysis, he developed an integrated set of financial models. Individual sales models for each product line fed into corresponding product P&Ls. These P&Ls consolidated to form the company-wide operating income statement. Subsequently, the balance sheet was derived from these income statements, supplemented by data from non-income statement sources such as capital investment plans and depreciation schedules. Then, indirect cash flow was inferred from both the income statement and balance sheet forecasts.

The comprehensive financial statements package was successfully delivered to the parent company within the stipulated one-month period, and the results were presented to the Board of Directors a few weeks later. Not only did this solution satisfy the immediate mandate, but the models Sven developed during this process also laid the groundwork for the future development of balance sheet and cash flow models within Kabam Games' financial planning system. This initiative significantly enhanced the strategic financial planning capabilities at Kabam Games, providing a robust foundation for future forecasting and analysis.

EXPERTISE

• Management accounting

• Financial modeling

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