Module VI· Model Architecture & DesignIntermediate
Question
Which sign convention do you use in the model?
Answer
Use a consistent sign convention and label it clearly. Common banking convention shows revenue and cash inflows positive, expenses positive in P&L rows but subtracted in formulas, and cash outflows negative in cash-flow schedules. Debt balances are usually positive, repayments negative in cash flow. Consistency matters more than the specific convention.