Generally speaking, you want to isolate the drivers or the items that have greatest impact on the item. So if you determine it is % growth (standalone, like "Other Income") vs. tied to revenue (as revenue changes, that item is also affected) then you will use that appropriate driver. See our FREE RE... Generally speaking, you want to isolate the drivers or the items that have greatest impact on the item. So if you determine it is % growth (standalone, like "Other Income") vs. tied to revenue (as revenue changes, that item is also affected) then you will use that appropriate driver. See our FREE RESOURCES: www.wallst-training.com then click on FREE RESOURCES and locate the PDF file "Financial Statement Assumptions" for more information. When building a true build-up model, you would separate drivers for each business line, as covered in our Segment Build-up course (note: this course is not yet available as an online course, but is offered as a live public course, see our SEMINARS link for 2009 calendar when it is finalized). Read More

Ok. In your explanation, you said: "So if you determine it is % growth (standalone, like "Other Income") vs. tied to revenue (as revenue changes, that item is also affected) then you will use that appropriate driver." My question is how do we determine that in the first place? I also under... Ok.

In your explanation, you said:
"So if you determine it is % growth (standalone, like "Other Income") vs. tied to revenue (as revenue changes, that item is also affected) then you will use that appropriate driver."

My question is how do we determine that in the first place?

I also understand that in more advanced modelling, we'd use a separate, more complex method of estimating the item - like using the number of stores/sales per store/sq ft per store, etc in the other video.

So when would we use this basic rev%/growth% as opposed to the more advanced method - if we're making serious models, wouldn't it make more sense to always use the advanced method and just neglect the more basic alternatives?

Thanks Read More

Correct, whenever possible, you would try to use as much detail as possible. This requires an understanding of the company and sector you are analyzing. The idea is definitely to isolate the drivers of growth in your company and try to project that out.