Financial Modeling Blog

Financial Modeling of a Production Process

A production process is an economic process for converting inputs (raw materials, labor and other resources) into outputs (goods or services). Financial modeling of a production process helps illuminate the decisions regarding the process such as key dates, timing, capital asset purchases, and build or buy decisions. To illustrate, this article takes a closer look at a wine production process including growing grapes, crushing, blending, aging, bottling and packaging.

Seeking a Better Goal Seek

Goal seek in the context of financial modeling is a simple analysis to answer a question of the form.

What value should X be to make Y equal to V?

Both X and Y are variables of the financial model and V is some constant. Break even analysis is a simple example of a goal seek problem and has the form: