The Nicholas Center seeks to provide educational resources for current finance topics, and one of the areas we have been studying recently is the impact of the new tax reform bill on financial modeling.
The tax reform bill known as the Tax Cuts and Jobs Act was signed into law on December 22, 2017. This legislation has major impacts on financial modeling and valuation – most notably the reduction in the corporate tax rate from 35% to 21%, but in many other provisions as well. Many basic financial models (e.g., LBOs) must fundamentally change as a result of the legislation.
In conjunction with our Analyst Development Projects, the Nicholas Center has created a presentation and an excel modeling template to help finance professionals understand the granular impacts of this law. This analysis was formally presented in December 2018 in our Financial Modeling & Valuation class.
Please find attached the following:
1. Nicholas Center presentation on the financial modeling and valuation impacts for the TCJA (assumes some familiarity with the TCJA and modeling)
2. Nicholas Center excel modeling template showing the modeling impacts from the presentation (in #1 above)
3. An overview of the TCJA for businesses from the IRS
4. E&Y analysis of the TCJA’s impacts on businesses and key industries
We hope these resources provide some clarity on the most important impacts of the TCJA.