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Module IV· Operating ForecastBasic
Question

Which operating items must you forecast in an LBO short-form model?

Answer

Six core items are enough for CFADR in the short form:

  1. Sales: top-line growth %
  2. EBITDA: margin %
  3. D&A: % of sales or absolute
  4. Taxes: effective rate (~25–30%)
  5. Capex: % of sales (maintenance + growth)
  6. ΔWorking capital: % of sales
Rule of thumb

a fully integrated balance sheet isn't needed in the short form — only the cash impact matters.

Common pitfalls

off-balance-sheet items are often forgotten — model pension deficits (local GAAP vs IFRS IAS 19) and operating leases (capitalized under IFRS 16 since 2019) separately.

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