Digital Asset Trading Business Financial Model – Case Study

Introduction 

The Oak Business Consultant prepares the following case study, which is about a company specializing in providing regulatory and technology stack solutions for digital asset trading. The client company is looking forward to raising funds for its operations and expansion with the help of an Excel financial model.

This case study presents the process and analysis techniques used to prepare a digital asset trading financial model. Furthermore, the financial model prepared by our experts is fully customizable. The user can adjust the input values, and the model will completely update itself.

Purpose of the Company 

The client company specializes in providing reliable assistance to digital asset trading businesses when it comes to regulations and technology. The primary objective is to support businesses in the fast-growing digital asset industry by helping them navigate complex rules and regulations. The client company also offers advanced technology solutions to improve the efficiency and effectiveness of business operations. The ultimate purpose of our client company is to help these businesses stay compliant while making the most of the latest technological advancements.

Client Offering

With expertise in both regulatory compliance and technology integration, the client company offers comprehensive solutions tailored specifically to the unique requirements of digital asset trading platforms. The client company recruits a team of experienced professionals who understands the evolving regulatory environment and is adept at helping businesses achieve compliance with industry standards and regulations.

Challenges 

• The client company is a group of companies, and our client wanted to prepare each company’s financial statements separately.
• Moreover, our client company also wanted to assess the Group Company’s financial standing as a whole. 
• Our client wanted us to prepare a financial model forecast for the next five years so that our client could plan accordingly for the finances and other needs.
• Our client company wanted to calculate each company’s depreciation and asset calculations separately. 

Solutions 

Our experts from the team prepared financial statements for each of the companies, with advanced formulas and linkages to enable the financial statements to be adjustable with a few clicks in the input sheet. 

In addition, to collectively represent the company’s financial performance, we prepared Overview Statement. The overview statement is the master sheet representing all the parent company’s financial statements. 

We implemented complex formulas to enable the changes in the input sheet. The asset details for each company can be adjusted from the input sheet of the depreciation table, and the asset calculation sheet will update itself. We calculated depreciation for assets separately for each of the client’s companies as the client wanted a clear idea about the asset position in each company. 

Nodes-Working

Nodes maintain a copy of the entire blockchain and play a crucial role in validating and verifying transactions and blocks. Nodes are responsible for the following: 

• Storing a copy of the blockchain 
• Validating transactions 
• Propagating transactions and blocks 
• Mining and block creation 
• Participating in consensus

As nodes are a critical part of blockchain technology, we have included the working of nodes in our financial model. Our financial analysts have designed the customized financial model for the blockchain business and included the complex workings for master nodes and sub-nodes so that the client company does not miss any detail and can fully utilize our financial model.    

Results

With the help of our financial model, the client could predict and make plans for their financial performance for the next five years. The model included their total revenue, expenses, and cash flow projections. It also considered factors like project evaluation, how money is used, financial ratios, and breakeven analysis to understand how different things affect the client’s financial results.

Below, you will find the financial statements and future projections that showcase the details of the forecasted financial model. 

Financial Highlights

Income Statement 

The income statement is one of the core financial statements of a company. It tells about the revenues, cost of goods sold, expenses and net profit of the company during a particular period. Our experts from OAK Business Consultant prepared the income statement for the client with complex logic and formula structure, making it adjustable from the input sheet. 

Moreover, as the client company is a group of companies, our financial analysts prepared income statements for each of the companies. In addition to summarizing the performance of the company as a whole, we prepared a consolidated income statement for our client company. 

Cashflow Statement 

Our client’s blockchain startup business had its cash position analyzed through a cash flow statement, which details the cash inflows and outflows over the next five years. During the first year of operation, the business invested in the acquisition of assets, resulting in cash outflows from investing activities. Despite this, the overall cash flow position of the company is satisfactory since it has been receiving cash inflows for all years analyzed.

Balance Sheet 

A balance sheet is an essential financial statement that tells a company’s financial health. A company’s balance sheet represents the resources that are a company’s assets and sources to fund those assets, which is basically the capital.  

As the client company is a group of companies, our financial analysts utilized their skills and techniques to represent each company’s balance sheets and a consolidated balance sheet to represent the parent company’s financial position. 

Depreciation Table 

We provided a cumulative depreciation table for our client company. The depreciation table reports the depreciation being charged on the assets. In addition to it, we prepared asset calculation, which involves all the details regarding the assets being purchased, written off, and profit and loss on the disposal of assets. 

Financial Ratios 

Financial ratios are quantitative metrics used to evaluate a company’s financial health and performance. In order to give an idea of the company’s performance, our financial experts prepared the financial ratios analysis sheet.  The financial ratios analysis sheet includes significant ratios such as gross profit margin ratio and net profit margin to measure the profitability of the company. Moreover, we also calculated the liquidity ratios to measure the company’s liquidity position. 

Conclusion

Blockchain technology has been rapidly increasing in recent years for various reasons, including security, transparency, payments, smart contracts, digital identities, etc. The blockchain industry is expected to grow at an annual growth rate of 56.3% by 2029 and reach a value of $163.83 billion. It is the future. The majority of people in the near future will prefer blockchain and cryptocurrencies over traditional systems. 

Our top financial analysts from the Oak Business Consultant team worked on this project and prepared an advanced and complex financial model for our client’s digital asset trading startup. Our team always looks forward to providing great business and financial solutions to help our clients achieve their maximum potential.