Model library

The Profitability, Financing, and Growth of the Firm

Goals, relationships, and measurement methods
Sven-Erik Johansson and Mikael Runsten
Studentlitteratur
2014, second edition

The book contains an accounting-based model for integrated analysis of a company’s profitability, financing and growth. The book is rather compact in form, with a focus on important concepts, accounting key ratios and their interrelations. A concrete example with increasing complexity is used to illustrate most of the ideas. In order to internalize the practical relevance of the book we strongly recommend that you read “real annual reports” in parallel with reading the book. In other words, read and try to make sense of what companies write about financial strategies, financial targets and which key ratios they choose to use when presenting performance and future ambitions.

Another method to make the concepts of the book come alive is to analyse companies that you care about. Calculate the key ratios and evaluate how sensitive the numbers are to alternative financial choices and outcomes. In order to simplify some of these tasks for you, we have made several simple (and sometimes more complex) Excel-models that you can download and experiment with. The headlines are meant to help you to see what the models try to capture.

Do not forget that a model can be very practical and helpful, but it cannot not draw conclusions for you. The wise conclusion you will have to draw yourself.

DuPont Curves

Models for graphical illustration of how return is made up of margin and asset turnover (see chapter 6 of the book).

DuPont Tree

Models for decomposing and analysing the return of a company. As a first step the return is decomposed into the margin and the asset turnover. In a second step the components of the income statement and the balance sheet can be further analysed (see chapter 6 of the book).

Relative reports

The provided models help you to create what we call relative reports. I.e. all the numbers in the income statement and the balance sheet are presented as a percentage of total revenues.

Leverage relationship

The provided models support your calculations of the components in the leverage relationship. Read more in chapter 3 through 6 in the book.

Growth relationship

The provided models support your understanding of the components in the growth relationship. Read more in chapter 7, 8 and 10 in the book.

What-if

Here we provide models for evaluation of more complex business scenarios. The model called Futura is made for evaluating scenarios in line with discussion in chapter 8 of the book. The ND/EBITDA-Covenant-calculator builds on the discussion at the end of chapter 9.

Valuation of companies and shares

Here we provide models that support the understanding of the valuation discussion in chapter 12 of the book. We suggest that you try them out on companies that you are interested in.

Age calculator of fixed assets

A simple model that calculate the life and age of fixed assets based on footnote information. See chapter 13 in the book.

Capitalize R&D

A model that supports the analysis of how income statement, balance sheet and important KPI:s would be affected if R&D expenditures were to be capitalized rather than expensed immediately. See chapter 13 in the book.

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Bild & Runsten Financial Intelligence

Strategic Business Finance Intelligence is worthwhile. It can shed light on questions such as: Who is performing best in our industry? How good are we at attracting supplier financing compared to our peers? Who of our competitors has the muscles to lead the consolidation of our industry? Who in our industry will face financial problems in the next downturn?

To answer the questions above, and many more, we have developed Bild & Runsten Financial Intelligence (BRFI). Basically, it is a database benefitting from our deep expertise of performing high quality analyses of companies’ financials. Its careful selection of relevant KPIs, user-friendly presentation format, and appealing layout enables true financial learning and very powerful company analysis, both over time and across companies.

You can order analysis of company financials from us. We will upload them in BRFI and give you unique access to the companies on your wish list.

Follow the link below to get a flavour of how relative reports may look.

Login: demo@brfi.se
Password: demo

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Bild & Runsten Financial Test

In many situations there is a need to assess financial knowledge, be it board evaluation, recruitment, change management endeavours, or training preparations. To meet this need, we have developed Bild & Runsten Financial Test (BRFT). It contains hundreds of financial questions that can be twisted to meet your unique purpose.

Follow the link below to get a flavour of a test we designed for a client with a specific purpose in mind. The client wanted to test the organisation’s knowledge about its main KPI – the Operating Margin. In this particular case, we wanted to test the knowledge about why the Operating Margin is important, how it can be improved and what is included in the measure.

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Bild & Runsten Financial Coaching

Have you ever hired a personal trainer to boost your fitness? Have you considered to let a piano tutor help you master your favourite pieces? Well, then you have an idea what Bild & Runsten Financial Coaching can offer, namely precious sessions one-to-one with one of our experienced partners, be it in real life or over the internet.

We have helped business leaders and financial specialist to broaden or deepen their desired knowledge since 2003. Among other topics, we have dived into discussions about which KPIs to prioritize, how to structure a takeover deal, and how to communicate financials to the board. Yet, it is important to emphasize that our core is financial learning, and not financial consulting.

Our clients have typically come from listed companies, family owned businesses, or state owned enterprises. Some have been politicians and entrepreneurs. They have been united in a conviction that Bild & Runsten can offer something truly unique, something they can not get in open enrollment programmes at business schools or consultancy firms.

Naturally, most clients have been Swedish, but we have also helped Norwegians, Danes, Finns, Frenchmen, and Americans to develop. The list of positions is fairly long, we have met owners, chairmen, CEOs, CFOs, CTOs, CCOs, CIOs and some others.

Should this be something for you, don’t hesitate to contact us!

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Bild & Runsten Financial Models

A core competence of Bild & Runsten, in any financial learning situation, is to integrate financial consequences and business activities. Tailormade financial models, often built in spread sheet programs, can play an important role in this context.

We have built many financial models over the years, always keeping in mind our moto ‘the simpler the better’ and our credo ‘never ask a model a question it wasn’t built to answer’. The models have served us well by increasing the knowledge of both our clients and ourselves.

Our standard advise to people asking for a financial model is ‘construct your own’. By doing it themselves they will deepen their financial learning. Still, even the one who opts to follow our advise can benefit from some inspiration. Therefore, you will below find a selected few of our models.

Should you need our assistance, please let us know!

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Bild & Runsten Financial Opinion

We offer high quality second opinion to decision makers, for instance when a takeover bid is to be placed. We help shed light over questions such as: Is the suggested price reasonable? Have the relevant circumstances been considered?  Which profitability do we need to reach to motivate the price? We restrict our services to give second opinions, hence we do not provide first opinions.

Bild & Runsten has a unique advisor position combining deep theoretical financial competence, outstanding pedagogical skills, and thorough business understanding. We have PhD-degrees, diplomas in pedagogy and many years of experience from teaching managers and board members business finance. The amount of teaching awards from executive education and business schools is a strong indicator of our teaching quality and impact.

We have had roles as experts in high profile financial disputes such Livförsäkringsaktiebolaget Skandia versus Försäkringsaktiebolaget Skandia, Carnegie versus Riksgälden and Swedish electric grid owners versus Energimarknadsinpektionen.

If you want our financial opinion, do not hesitate to contact us.

Open Enrollment | Profession | swedish only
Open Enrollment | swedish and English
Open Enrollment | Industry | swedish only
Open Enrollment | profession | swedish only

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Customized program | Topic

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= Financial test

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Best Teacher Awards given to
Bild & Runsten over the years:

Wirtschaftsuniversität Wien – PMBA 2020
Wirtschaftsuniversität Wien – PMBA 2019
Wirtschaftsuniversität Wien – PMBA 2018
Wirtschaftsuniversität Wien – PMBA 2017
Stockholm School of Economics – MSc 2016
Stockholm School of Economics – EMBA 2012
Stockholm School of Economics – EMBA 2011
Hanken & SSE – Best exec faculty 2010
Stockholm School of Economics – EMBA 2010
Stockholm School of Economics – EMBA 2009
Stockholm School of Economics – MBA 2007
Stockholm School of Economics – MBA 2005
Stockholm School of Economics – BSc 1995