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IFB Equity Model FAQ

If I have a stock, specifically Nintendo, which has an accounting year from March to March and I could calculate 2020, how would I input those numbers into the spreadsheet considering only the first three columns are editable?  That being said how do I edit the numbers for future years going forward?

Glad to answer your questions. In addition to my responses here, remember to use the “Instructions” tab near the front to help guide you. You might also be interested in reading our series of articles on building a 3-statement financial model (link here) to help improve your understanding of the mechanics.

The orange highlighted columns on each tab (income statement, balance sheet, cash flow statement) are where you can input the historical numbers. The naming of the columns (ie. 2019) can be considered to be fiscal years which are different from calendar years. For Nintendo, it sounds like their latest fiscal year ended in March 2020 and that year’s information can be put into the 2019 column and renamed appropriately depending on if the company refers to it as fiscal year 2019 or 2020.

After you have inputted the historical numbers, the “Inputs” tab is where you can adjust growth rates and override the operating ratios which are automatically calculated. Cells which need to be forecast on that tab are highlighted in orange as well, but you can also feel free to override any of the automatically calculated cells that are based on the historical financials if you think they will change.

What is Equity method income?  And is there an equivalent name that others might call this?

Equity method income is not necessarily relevant for all businesses and can be left blank. It refers to the proportional share of net income for a subsidiary in which ownership is not great than 50% and as such, it is not consolidated into the financial statements (link about subsidiaries and ownership structures here).

For example, if 25% of a subsidiary is owned and their new income was $1 million, equity method income would be $250,000. For the starting example with Coke, their equity method income would refer to their partial ownership stakes in bottlers around the world. If equity method income is relevant for Nintendo, it will show on their income statement. The line item on the income statement could also be called associate, joint venture, subsidiary income, etc.