 Let me just review some of the agenda we discussed in our last session. We understand, understanding how a business-generated revenue is very important because that is more like the open-able business revenue, it's like the umbrella of a business. In case you missed part of the last webinar that we had, my coordinator, we also shared a link with us so that I can go through it again. Then we discussed some components of revenue before you have anything called revenue. We must have two main components, we call that price and quantity, irrespective of the type of industry you fall into. You said about building a module where it is all about drivers and we also discussed that as well. Then we did some game where we had some prizes and we did some demo. Let's just go straight to it. Let's go straight to it. The demo. Let's continue. Let's go straight to where we stopped in our previous webinar session. Let me point this example and let me just recap. We assume that, okay, yes, this is a business and what they will be doing is they will be giving loan out to people. That loan will be dependent on people that save on their platform. One thing I want us to understand is a module and the reason why it's called module is because you can be flexible. You can incorporate different scenarios, right? But the other thing is, hey, understand, hey, this is how to approach it. And that approach, that concept is not what you apply irrespective of the type of business module they adopt. They say that, okay, you know what, yes, people can be saving, but the savings, the loan will be given out will not be dependent on the savings. People are saving. Maybe they will raise some other investments, right? They have some surplus cash that they can give out, right? So how do you get to build that into that revenue and everything is perfect? So for this one, we're saying, okay, you know what, let's start first. Let's say people deposit, which is more like a typical operation of a bank, right? People deposit into the bank. The money you and I take into the bank is what the bank will convert and use it to give loan out to people, right? So we still have some surplus cash in the investors in some other investment security to generate interest income, and that's more like the approach. So let me run us through the assumption that we're able to build. So we built this from scratch, yes, so you can reference the previous one. So we said, let's start with our base users. And we said, you know what, for the base, let's start with 500 people. And we also agreed that, okay, you know what, let's build this calculation month on month. You said, okay, so growing monthly, we said, let's assume we have 500, right? And can be growing. So everything in year one, we grow by 5% in year two, 12.5%. So more like a bit monthly growth, right? And year four and year five. And we said, okay, you know what, yes, you can have a base user. Well, on your platform, you're saying you have 5 million users. But the truth is, are you really generating from all those 5 million users? And that's what brought about this discussion of what we call active users. So, yes, you have 5 million users. Yes, 5 million have actually, 5 million people downloaded your app. But 4% is really generating revenue for you on that platform. And that is why we set this. So 50% in year one, 60% year two, 70% year three. And then you realize that in year four and year five, we decide to make it, decide to reduce it. And you'll be like, okay, why? But everything's supposed to be increasing. And the truth is, if you have 100, let's say you have 100 people. You're saying, hey, I'll be generating 50% from these 100 people. That means you are generating, you have 50. Now, if we now increase to 1,000, you're saying, okay, this is now 1,000. I will be generating 50%. You know, that will be 500, right? So, okay, no, no, no, no, no, I don't want to be generating 500. Let me say I'll be generating 25%. That will still be like around 250, which is still higher than the 50% on 100. So that's what I want us to think. So a business gets to a level of growth where their growth increments kind of reduce. It does not mean it's not increasing, right? But that's growth kind of slowed down a little bit. A 5.7% increase in cocalcular revenue can never be compared to a 25% increase in a business that is just starting, which is kind of a beverage industry, right? So that's what I want us to understand. Yes, I know most people usually forecast and you see like the revenue just be growing, growing, growing, the truth is that does not apply in reality when it comes to business, right? Business don't grow on a straight line. I've never seen a business that is growing on a straight line. And what I mean is, hey, this year revenue growth, right? Percent increase is 10%. The following year, 10%, 5%, another year, 35%, another year, 45%, another year, 60%. We are not saying revenue will not grow. But that percent increase, right, is not always a straight line. You can see that why we decided to slow to have this in our monthly base user growth. We are saying, hey, this period, you have 500 and everything will be increased. By this time, maybe you have gotten to 5,000 users, right? And at that point, you've already gained the market. So the growth may slow down because it's 2.5%. So let's say you have a 5,000 previous month, turn rate. People that buy today and are not buying tomorrow. So let's start. Let's get started. Let's start with that one. So let's take a step back. Let's take a step back to see how we started our calculation. So we build this out month on month. And this is what we have here. So when I said, let's build out our base, our base users, right? So equal to, I'll go to my inputs, base users that we are starting with. So let's call this, we can just copy the unit. For the base period equal to, so whenever you are building your model, your model is you already have something we call the base period. Base period is as good as last historical year or your year zero. So let's say, hey, the business starting, try to acquire, spend money on marketing and all those things. Let's say they can get started with 500 users, right? Then what is their growth? Now this growth has been set to be more like a monthly growth. So what we are saying is, hey, everything in year 2022 will increase by this 5%. Everything in year 2023 will increase by this 12.5% fat. It's always good to give that description. Let's say, percent monthly, right? So that is well-explanatory. So let's bring that growth. Let's bring that growth. So we're going to do this as just as a massive, where I'm going to do this presentation as I'm building my own typical model. So I'm going to do some intentional mistake, right? So that you know that, hey, it's not always perfect, but the truth is, hey, whenever you are doing anything as a modeling concept, number one, know your expected output. Then ask, is this making sense? So that can help you limit errors in building a model. Trust me, right? So let me put this as percent. I'm going to, what I need now is remember what I said, everything in year one will increase by this 5%. And I want to automate this. So I'm going to use a formula we call lookup in Excel. Lookup, right? You can use lookup. You can use match and index, right? Excel is very, very interesting. You always have more than one or two ways of getting things done. So lookup, what are we looking for? What are we looking for? So we are looking for, okay, let me put that again. So lookup. We are looking for this our year, which is year 2020. So let me just keep the row constants. So that I can copy it for other cells, right? Coma, then is asking me my lookup vector. So I'm looking for these two, 2022. I'm looking for it in this my year that I've created here, right? I'm going to keep that year constant because I'm going to drag everything. So comma, then what should be the result vector? So I want it to return this our monthly growth. So I like everything and I will just lock the column with the brackets and press enter. Then convert this into percent and put it into my percent format. And I can just drag it to the right and press my controller. So in the previous session, we were able to set this out to set your Excel worksheets right into this monthly calculation so that you don't need to be, just all you need to do is put for year one. I let everything to the last year and press control hard. So we can see what we have here. So everything in year one, we are expecting an average of what? Average of 5% growth, right? Then in year two, we also have this. I'm quite sure the question that will come up into some of us mind will be like, but a typical business really does not grow like this, right? I agree with you. So you're saying that in months one, so maybe the percent will be 5.5 in year three, my slowdown in year three, my go up in year four, my slowdown in year five, in my slowdown, right? Yes, that is true. But based on our first standard, they say, you know what? Don't over cluster your module with a lot of assumptions. The truth is, it does not make sense when you have all your input worksheets laid out more or more. So let's say in January one, 2020, this will be our percent in January two. Yes, you can do that for our typical management module and all those things, right? But try to keep things short. So let's say year one, average of 5% growth. So we could have a variation. It could increase. It could put that average kind of a post-balance things up. So another thing you could do is to now factor in seasonality. But that would be another discussion for another webinar, which could just kind of help you, which kind of help you create those moving trends, right? I say, maybe in January one, people tend to, people don't save that much, right? Then you say, okay, yes. This period, let's expect our revenue. People's savings will kind of go down a little bit and we too might not be able to dispose more loans in February. Yes, it might still slow down. But when it's getting to May, June, people want to save, right? Towards December. So the savings are kind of what that seasonality trend we have was achieved. So let's keep it short. Yes, so base. So let's create our base schedule. Okay. I'm not sure. Since I've forgotten the spelling of schedule. I think I got it now. I think I got it now. So then we're going to have our beginning users. Beginning users, right? We have our added users. So add to new users coming here. Then we have our ending users number. So let me put this in our total format. Then our base users enter. Then that base users will be our beginning users. Starting with these guys. Our addition, right? So let me increase this. Those will be equal to my base year. Multiply by my brackets. One plus this my growth monthly growth rate. Enter through the brackets. Let me remove the comma because these are people. Right. So copy that to the right. And then we expect by the end of the year five, we should be able to have 27,000. Now on it and 73 users. So remember, these are just fictitious assumptions. And it's just to let us understand the old framework and the concepts. So new users will now be equal to my current base users minus my previous year users enter and the submission. We also give us the same thing that we have up here. So let me drag this to the right. So that we have almost the same thing. Which means we've set to that our base users. Now, the next thing is to now get our active users. Active users. So I'll come in here. That's just to make it easy for people to understand. So that part base users. So let me change the format. And this will now be our active users. So equal to let me link that to here. Percent of our base users. That's what we said would be our active users. I can even use that same. This is our lookup. I will copy it. Copy here. I'm a very lazy financial. I'm a very lazy Excel user. So I love doing things very, very fast. Yes, the lazy people, we know Excel very, very well. You know that it gets to do things faster. Right. So here I remember I've already done some of my cell references. So in case you don't know more about cell referencing, you can learn that. All right. It's very, very important. Cell locking or something called cell referencing. So what I'm going to do is I'll just go to my inputs. I'll just look at, hey, this my percent here is on row. This should be row, right? Row 14. So I'll come back to my calculation and just change this 19 and I'll just change it to 14. Instead of typing the formula again, then I have this. That's smart. That's smart. So let's look at our active users. Active users. All right. This will be number. Active users will not be equal to. Now let me ask us the active users. Will it be a percent of the ending users or the new added users? So we need our beginning users, beginning active. So they will be beginning active users. Right. So we need our, so we need our, let's add our what's our new active users and we need our John users. So people that buy today and they will not buy the next period. Right. John active users. Then we have our ending active users. Now I'm loving this. So. Okay. So now the truth is, and that's one thing I love about finance as you, the boys in your course, you are the one drawing. Right. But as much as you are drawing, you should be able to give a real base as to how you've drawn it and give a reasonable reason. So they are saying, Hey, it should be a percent of our new users. You should be able to give a concrete reason as to why. But decide to do my order. No, it should be a percent of ending users. It should be able to give that reasonable reason as to why. Right. So this is what I feel. And let's, let's apply that here. As I said, you can decide to do it your own way. Right. The open is, Hey, does it make sense? Why has it been done this way? So percent of new users, as I said, active users. So we are saying, okay, you know what? Let's use new users as a percent of active users. So I'm saying equal to this, my 50% multiply by this, my ending users. Enter. But if I'm going through the, so this is more likely. But if I'm going through the route of, you know what? My ending active users, then that will be my what I'm saying, my ending users multiply by my active, my percent of my activity. Right. Enter. Then with this, I'm correct. But remember, we are building is K do. So because of that schedule purpose. So the highest thing we can do is let's even say this percent is also the same thing. Right. With this 50% I'm saying, Hey, my, this user should be this 50, this 500 multiply by what? By this 50% enter. Then that means we have a beginning users. Then my new active users will now be what same users will now be what my new users multiply by this, my sense of sets for my active users. And this is now makes sense. But I'm going through the route of, Hey, my ending use my ending active users. Then definitely I should be using my percent multiply by my ending users. As I said, the boys, your courts as long as you can defend it very well. Yeah, good. So we need our strong users. So let's also get that from our. Let's get that. So let me change this. So equal to, we need our turn rate, which will set here. Enter. Right. So for our choices, I can even copy the same thing. Let me be lazy. I can copy it down. Let me look. So this is 16. This is row 16. Right. So let me do the same thing here. Row 16. So let me change this. My, as I said, a very lazy, very lazy person just then to get things right. Let's look at it. So our turn users will now be equal to turn it multiply by what's more like our previous ending active users. Smooth. The previous is the same thing as beginning users. So let me just press this enter then equal to my beginning balance plus my active minus my turn rate. Now I'm quite sure you can see one funny thing that is coming here. Let's say it's all about common sense because it's as good as saying you are doing one plus one plus two something multiplied by something. You can see that's all I've been doing. So now let's look at this. There's already one funny comma that you can see there. Can anyone point that out? Just look at this. What I've done here. Anyone point this out. So turn active users is lower than the base active users. Okay. That's one. I love that. I love that. Thank you for that. So what do you think? What do you think? Look at it closely. There's already something. Something is already solved here. My beginning active users 250 my new active users. Right. Maybe let me active users. Let me complete this one. So new active users. What can we see from here? Let me hear from us. Let me hear from us. Let's make this interactive. Chon should be a person of new active users. Okay. Are you sure? I'm not 100% sure about that. That this Chon should be set on our new active users. I believe it should be set on, hey, close this period with this set of people. Right. So one thing you should see, one thing we can see here is, you can see that the Chon number is already higher than the new users that we are adding, which really does not make sense. I will say you are adding 13 active users and 25 users are also leaving. It really does not make sense now. Let's look at this so that you can, so that we kind of see what this is saying. So if I copy this to the right, let's look at what's happening. So you are saying, so if you now take a look at what is the, what is the actual percent, right? So these are more like to see how this is making sense. What is the percent of active users, of active users to our base users? Our base users, right? Which is more like, this is more like the most important, one of the most important metrics when you are into a fintech that's demo which users. So we are saying, hey, my active user divided by this, my base users. So let me put that in percent. Let me drag it to number one. You can see that now the percent, so maybe let me, let me freeze this my panel. That's kind of easy for us to move. So what basically we are saying is this, hey, the percent of our active users, we keep dropping over the period. This really does not make sense of them. Right, 3960, it really does not make sense. And if you look closely, that's trying to keep matching up with the new users. It's as good as saying, you are adding, you are taking, you are adding, you are taking. It really does not make sense. Because those are kind of things I want you to understand as a modular. It's about, is it making sense, right? What are the metrics? What story are they telling? You expect your conversion rate, so we also call it conversion rate. You expect that your conversion rate to be increasing over a period. So what we are going to do is this turn rate, let's convert it to monthly. So let's say, let's assume this is more like the turn rate per annum. Let's say per annum, right, more like yearly. Which means inside here, we now need to convert this into what? Into a monthly growth. So to do that, right, so our first standard is saying, whenever you are building your module, your module should never have what, should never have any added value. Is that good to your input and type those added value. So let me just call this, okay. So let me see, let's see how we can do that. So I can just create another add-ins up here. Let me just call this one our general. Let's call this general assumptions. So we have this idea and create my, let me put this in these formats. So I like whenever I'm building my module, that professionalism. I like it coming out, right, in everything I do. And that's the same thing our standard is saying. So, okay, maybe we should just call this one general assumptions. Call this one general assumptions, right, then I call this maybe tiny. Let's call this one tiny. And we see this month, month. So month in a period. So, and that will be, that'll be like 12 months. So I'll just type my 12 here. So I can even use my naming range. I'll come here and type it as module month in time. If I come back to my calculation, what distance it says that I have here, I can now multiply it by my brackets. One divided by my module, that my module month, which is 12, one divided by 12, right, and press enter. Then I can copy that to the right. Now, actually this just kind of make little sense, right? So you're saying, hey, if she knows, if she'll be able to manage your clients very well. All right, so remember if you have any questions, we'll be able to drop it in the chat box so that I can address that. And now it's making sense. All right, so we are starting with 14, 471, and you do 471. I think that's still reasonable as compared to that to what we have. So you're adding 409, right? That's 471 people are living. So I think this just kind of tell a very good story as compared to what we have, right? And you can see that that conversion rate is now making sense. It's increasing over a period. So now that we have our active users, let's go straight to the other parts. So we've dealt with our users. Now let's go straight to our savings. Savings, savings, 77. So we are done with this guy. So let's go to another editing. So I can copy this editing and put it here. And let's call this our revenue. Okay, let's, okay, maybe let's take it on after the other. Let's call this our savings, our savings, right? Question of our savings. And what do we have for our savings? So we are saying, hey, people that will be saving, right? Yes, you can have active users of this, but let's see now, let's see streamlining it. So there's something we call top down and bottom up model of, model approach. So you're saying, hey, in this town, the total population is 5 million people, right? But the percent that we can really get is maybe 3 million. So out of that 3 million, right? How many can we even get on our platform? So out of that 3 million, I say, okay, yes, we can actually get these 3 million, right? But people that with the number that we are sure that can come on our platform is maybe 2 million. Out of that 2 million, how many can even buy from you? So that's more like, what we call more like a top up, top down approach. So here when I say, okay, you know what, yes, we have these activities as well, how many can even save? So let's go straight to our savings. And the first thing we need is equal to, we need a percent of active that will be saving on our platform. And as you know, I said, I would just come up here, let me copy this, copy it. So I don't need to type that formula again. I'm trying to work smart. Don't mind me. So this is row 26. I would just change this. Six, six. So building a monthly model, I feel this is very, it's so, so easy. Equal to now, remember this is just like a percent of our active users, right? So let me see the savings. So I'll call this our savings users. As I said, this is not a one-way thing. You are, you can always be flexible. The other thing is understand that concept and how to apply it, right? Financial modeling is not a fixed one-way thing. Allow to be flexible. But as you are doing it, always ask is it making sense? So that means any users multiply by this by percent. As you can see now, we are using that other approach. I can copy this to the right. I will have an expected number of users that can save every month. So the next thing is what do we need? So let's first get our average savings per month. So here they are telling others, hey, based on this, right, average savings per person expected is 20,000. Any month. So this is my own look currency. Yes, yes, yes. So let's first get that equal to average savings per user enter. Right? So this would be my own currency. And what is the base expected savings? So we expected at least 20,000 naira. Then what is that growth? So let me bring that to the growth of that savings. So if you want that savings to install, it's supposed to be to be able to increase that savings by users, right, as time goes on. So it's up. All right. So this will also be in percent. Let me also let me be lazy. I'll just copy this. My lookup function that are my cell reference. So here is 31. I just think, okay. So that one is working perfectly. So copy that. And I will just use my growth. So equal to previous year multiply by my bracket. One plus is my growth enter. All right. I can drag that for the years. But this is this is now. So those are these are real. This is how we tend tends to make necessary. What do we do? What do we do? Then we need to reduce this. So let's say something like 2.5. I think that's that's way too high. All right. So from 20,000, at least someone should be able to say it is 7. I think that's too high. That's too high a little bit. So let me change this. Let me change everything to 1.5. Let's be conservative. And we kind of see that. Okay. Yes. Okay. So 10,000 at least up to 50,000 per month. So I think that is that is making sense. So what is our total savings? Our total savings, right? Percentage that we can have then that will be equal to my savings users multiply by that average savings by users enter. Let's copy this to the right. And I have this. Let me expand everything. Okay. So this is kind of huge. This is huge amounts. So for the base period, right? Let's also get that. This is okay. Let's leave that base period. So let's create our savings. Our savings, our savings, our schedule. All the schedules, they are very, very important. Do a schedule. Right. Well, let's got this one. So let's say now beginning savings. Right. Then add our new savings coming in. And we less our withdrawal. Remember people with dignity withdraw every month. So less withdraw or less withdraws anyone. Then we have our ending. And these savings, savings balance. So these savings balance. So then copy this. My beginning balance automatically be my ending balance of previous period enter. My new savings would be equal to, now let me ask us, that's our new savings. Maybe these total savings. Okay. Let's, let's, let's, let's even look at, let's say our new savings will be these total savings for this period enter. So we come back to the withdrawal. We say beginning balance plus new savings minus withdrawal enter. I can drag this period. And this is, this is, this is huge. Right. So from 2 million, by the end of your five, you're saying, hey, we should be able to have savings of 9 billion. Right. Everything is achievable. I believe that's what's right strategy. This book, remember, we've not considered our, our what's our withdrawal. So what is our withdrawal? So they said our withdrawal will be the sense of our savings. So less factor that in, less factor that in. So, okay. So, so that this one is well explained. Let me leave it that way. I can just create another that's equal to my withdrawal. Enter. That will also be in presence. Copy. This is my guy here. This formula. Paste it here. Back. Let me look at the rule. That's rule 20. Hit. And I'm just put my 20. It is, I'm just trying to work very, very smart. I've been able to achieve that by the help of that myself referencing. And we know this is what we have, which means our withdrawal will not be equal to open my brackets. That will be my beginning balance plus my new savings. And yes, you know, I know we would have, what would have done is let's consider it would have used equal to previous ending savings multiplied by this our withdrawal rate. Right. Let's say we use that one month first and copy this to the right. So which means in month one we draw in month two, month three. But remember, let's also consider what can save at the beginning of the month. Maybe in week one and decide to take back is withdraw in week three or week four. Funny, funny things can happen. Right. So I think we could have used this approach. Average of this beginning balance and this new, so new added savings close the brackets, right. Then multiply by what? Multiply by my withdrawal percent enter. So at least that we consider is someone might even save and decide, you know what I want to collect my savings back that same month. So we consider that and with this, we have our what our ending savings. I hope the story is making sense. I hope the story is making sense. At times this can be very, very bulky. It depends on the on the business you are building the model for. They could have some lot of this, this data. Hey, we get this user from this place. We get this user from this place. We get the user from this place. And you still need to be able to merge everything together and consolidate it. That's that's how interesting this thing can be. Right. But as long as you have understand that framework, respective of a digital, still be able to put everything together. All right. So now we have our savings. Now, do you still need anything else? So let's consider our youth on savings. So people that are savings with us definitely do need to get through return. Do you understand? So but before we do that, I'd like to calculate, let's calculate our average, our average savings for each month. So I think this is very important. All right. This is to just make adjustment for those timing differences. Someone could save at the end of the month. Someone at the beginning of the month. Someone at the middle. So equal to average. Let's get our average enter. And we have our average savings yearly. Monthly. So we have been in monthly. So next thing, what will now be our yeet? Equal to yeet here. You can see that, as I said, our structuring of your model. Right. It's very, very important. Our first standard is has eaten very, very hard on it so that you should be able to build a model. Also, one that should pick the model and understand without having to call you. But they can do the updates. Right. See, keep it simple. Keep it simple. So we have our model standards in our, it should not, any model you build, should not take, yeah, usually it's fast. It should not take you more than 10 seconds to be able to explain any formula you put in your model. Yes. This lookup is a typical, this one is still a formula. So it's not as if you are putting one formula, formula, formula, formula here. Lookup is the basic Excel things. Right. So yeet, so let me work smart. I will just copy this guy as well. Come down here and put it. And I will go to my, what? I will go to my, I will go to my input. Let me look at that row 34. Okay. So let me, let me even work smart. Remember with, so this is my input. This yeet is yearly. So let me convert it to monthly. Right. I think this, this is way too small. I believe fintechs, I don't know, I don't know, I don't know. I said, these are just fictitious assumptions. So let me come up here. There was one we divided with, we divided by month. So this is my chart. I'll just copy that formula. Come down here, paste it. Go to my input. This is row 34. I'll come back here. And I'll change this. My lookup vector to 44. Is that 44? I think, yes, we just checked 44. Right. I hope I'm correct. Okay. It's 34. So this should be 34. 34. Enter. So, right. And we have, this is more like our monthly yeet. Right. So this we will now call this our interest. This is what they call interest expense. Right. Which is more like cost of you having those savings. Right. For a typical business, interest expenses, you go to bank or someone borrow you money and the interest you are paying on it is about two. A fintech and a financial institution like bank, interest expense, that's more like we got their pay you on that savings that you've given them. So equal to, that will not be equal to, since we've converted our savings to average to make adjustment for those time differences multiplied by this. My yeet enter. Copy this to the right and we have this. It's more like they are more to that. We'll be shared by these people that have saved with us. So if I even see what is the, so they call it, I think is it cost. So we have cost of fund, cost of risk and all those things. So you also need to understand all those, all those metrics, right? They're very, very important. So we are not going there and this one. So the next one is now that we have our savings, let's work with our loans. So right. So, okay. So here for our loans, we're saying, okay, yes. Up a cent of our active users, we take loans on our platform. This is what we have. Or we say, what is the average loan per each user's monthly? Now 10,000, but remember this will be limited by the amount of savings that we have. So even if I say, okay, you know what? Hey, yes, this is the total savings that we have. But we are not taking everything out because people, yes, people would have withdrawn because of some more funny, funny things, right? The business too, we also want to invest in some other security. So maybe out of the, if you have these savings of 5 million, so we are making available maybe 3.5 or 4 million as a loan to people, right? So, okay. So we already have that. So average loan, 10,000, we're saying, hey, this loan can also grow by this. So I think this is also too high. Let's change it to something 1.5 for now, 1.5 since it's monthly. By the time you must buy that, 1.5 by 12. So we give you that yearly thing. So average loan times, I mean number of times can someone take a loan in a month and we've said this to once, yes, yes. So loan this bus as a percent of our savings. Say, hey, we are not ready to give everything out. Let's say, hey, 40% of our savings, then we can still make provision that maybe this other percent you're also going to some investment security and we can have all that cash on our platform like our reserve, right? Then we say the loan period, anybody that takes loan from us should be for 3 months. And this is the deed that we'll be getting on our loans. Now we are left with one thing. Let me see. Can anyone tell us on this part of the loan and advances? So please, whatever you want to be the new model for any industry, it's very important that you have the knowledge of the industry itself. So what we've missed out is what we call non-performing loan. Non-performing loans. Call it NPL. This is one very important. Yes, some also call it more like a default rate. This is very, very important. Right, because yes, you've given a loan out to people and what if they fail to pay? They need to make that provision, right? You need to capture the business as a whole. So we need to consider our non-performing loans. So for this, let me just copy this and let me put it here. And let's just say this has maybe 5%, right? 5% is way high, right? So you've given a lot to people and people fail to pay you. And you can see, I'm quite sure some of us we've experienced those funny things that would have send a message that, hey, this is also so your relative took loan from us and is here to pay. I know those kinds of things, right? So which is we also need to factor that into our model. So let's get started and let's go there. So here, we are done with our savings. So let me just copy this, our savings. And let me put it here, right? So first thing, I'll come here, let's do this. We need a percent of our active users we have here. And I can copy this, my formula here. That's it. Instead of me typing this over and over again, let me just put it here. So where do we have that? That is row 37. So row 37, I'll change this to 37. Enter, I can drag that to the right. So okay, so I forgot to change this to our loans. I'm borrowing, right? Is that what they call it? Let's just leave it as loans, okay? Loan and advances, okay? So loan and advances, right? So presents, so loans are users, right? So this one is presents, this one is number. I will now be equal to this set of active, multiply by what our ending, that should be multiply by our ending, our active users, right? Enter with this, right? So as I said, there are different approaches. You can decide that way. No, no, people that we are giving should not be percent of our active users. It should be a percent of our, what's our people, of the number of users that are saving on that platform, right? Because so you say that, hey, let's consider the number of people that are saving on a platform as the main, new as active users of active users. Does that make sense? Active users of active users, right? But that's more like it's, you just say, hey, let me try manage my risk, right? So if you are on my platform, you set up an account, you should be able to save before you can access any loan, right? Yes, you can now access more than savings, but hey, just to be sure that you are one of the active users, you must save first before you can access loan. So that's more like another approach, as I said. Flexible, understand, hey, this business, all their business model, all their business canvas, and that's really when we are building the model, right? Because everything was, the story must tie together. So now this is our loan users. Now let's get our average, let's get our average loans to users to manage my own currency, right? So for the base, equal to, we are saying, we are expecting an average loan of 10,000 to people. So let me copy this and put it here. Okay, now let me put it here, which will now be our loan portfolio growth, the growth of the portfolio, right? Okay, let me change that to number two, that should be 40. Just changing the number of my return vector. So here, it would not be equal to previous year, but it's probably my bracket one, plus this micro-trade enter and copy that to the right. So we expect to move from 10,000 to that is average of 25,000 loans that can be given us. So where's our total loans? So total loans, this boss. So okay, should we call it total loan, this boss. Okay, oh my God, that's spelling correctly, right? So in Excel, you are typing in Excel and you are not sure of the form of what you've typed, right? You can just highlight it like this on your keyboard, just press your F7. On Chris, if you have FN, you need to press FN. So let's assume, let me type it wrong, be here, right? This boss, this boss that, right, okay. So I think there's a word like this as well. So here, you see now, I've pressed the F7 and it's telling me that, hey guy, no, no, no, this supposed to be this boss. So I can just, if you correct those spelling. So F7, because you are using more of this, our own media, entertainment, laptop, you need to press your FN before you press that F7. So just change it for you. So I have the right spelling. Okay, that's by the way. We branched that side. Okay, so total will be equal to the average number of users multiplied by what? Multiply by this, total loan users enter, copy that to the right. Now, remember what we said that, hey, this loan, right, kind of depend on the savings that we have. So now we've gotten our, yes, this is our typical total loss that we think we can give out. But remember this other guy, which we call, okay, so far let's open factor in our average loan times first before we even go further. So equal to average loan times. So you can also see that the way I'm telling the story that is the same way my input has been structured. So please, it is very, very important to keep that at the back of your mind because those are the kind of things that makes you a great model. So this, and let me put this in my multiple, once, right? So you can see that this, they kind of follow each other. That's why 1.5, 1 times, right? So I also now need to consider, I need to consider that. Consider that in this our total loan is also multiplied. So in fact, I like keeping things simple. So this is the loan, open the brackets, put it in bracket, multiply by the loan times. Enter, and that's, this is the loan disboss. And now remember I said, hey, loan disboss is a percent of savings. So which means we need to first get the cash that we are from that savings. That's which will be the next thing. So loan disboss from saving enter. FinTech model can be so, so bulky, right? So that is kind of easy. Most of the time when you are building in that is when everything is flown into your brain. So you need to simplify, simplify it very well. So let me just copy this format here, our formula, and paste it here. Look and change the rule number 43. That's 43, 43, 43, and that's right. So now this will now be our what? Loan available, available to be disbossed, right? This now give us our loan available to be disbossed and that will now be equal to this 40 percent multiplied by this my savings. Now this my average savings. You could decide to use the end involved. Let's just use the average savings. Enter, copy that to the right, and we have this. Right, which is major. This is the loan that we have. This is the cash. Now we should even call this cash available, not loan. Cash available to be disbossed as loans. And this will now give us a restriction to be able to get our actual loan disbossed. That's why we are getting the old story. Right, so that means I will now need to restrict my loan disbossed to my available cash. Okay, so maybe let's increase our loan disbossed. Let's maybe it should increase it to 60 percent. Right, so with this, so as any 60 percent loan out, 20 percent reserve, 20 percent investment. So that's more like the approach. So the actual loan disbossed, right, will now be equal to minimum of my total loan disbossed, comma, and the cash available. Now close the bracket and press enter. Which means in this first month, yes, we forecasted that they can disboss the loan of 1.3. But based on from the cash that we got from the savings, it's saying no, you can only disboss 1.1. And that is what we now have here. So I just copied out to the right and here we have everything. Which means by the time they get to, I think that should be more like in year. At least let's look at it. Right, so remember this is also for management decision. So by the time they get to something like the following second year, they now decide that, hey, you know what, let's increase the number of loans that we can disboss since we now have more savings. So which means they will now, hey, the more we increase our savings, then the more we can have available cash that can be disbossed out as a loan. That's what we have here. You can say that, hey, you know what, 60 percent this period which increases 70 percent, this period 75, right, this period 80, and this period 85. So the whole strategy will now be, hey, you want less time and increase our savings. The more savings we increase, that means the more cash we can have available to disboss out as a loan. Now let's create our loan schedule. Create our loan schedule. We need our beginning, our beginning loan balance. We add our new loan disbossed. Right, then we have our what, our non, our non, okay, so no, no, no. We need our repayment. We need our repayment. So we now need to consider what will less our non-performing ending loan balance. We can have this, right? It should not be the next thing that we need to do. Let's create our schedule. Our beginning balance will always be equal to previous ending balance. New loan disbossed will be equal to this loan that we have here. Enter. It payments. We need to do that, right? Non-performing loan. So now let's link, let's get our non-performing loan. So I can just let me, let me bring it here. Let me bring that assumption here equal to, I'll bring my non-performing loan percent. Enter here and bring that here. So this also it presents. I can copy, let me just copy one of this, my formula, put it here. Look at that. It's in row 45, row 45. So let me change my return vector to 45. Copy this. Then we have this. With this, my non-performing loan be equal to, so let's just work with the same, that same approach we use, right? Let's just say equal to my beginning loan balance plus my new loan. Then multiply by what? Multiply by my non-performing loan percent. Enter. So we'll come back to that payment, which is where we are going to do the magic. So equal to beginning balance plus my new loan minus repayment that is blank currently now minus my non-performing loan enter. I can drag this here everything for the period. Right. Now let's calculate our interest income. So equal to I hit on loans, right? We are going to do an interesting thing on that repayment line. So let me copy this guy here. Let's see. These are percent. Okay. So that percent is set monthly. We don't need to divide it. That is 49. So row 49. In this, row 49. And we have our respective loan. So what is our average loan? Average loans and advances, right? That will be equal to average of previous period and current period. Remember, this is just to make adjustment for tiny differences. Then we can have our interest. Interest income now be equal to my average loan and advances multiply by what? By my yield on loans. Copy to the right. And we have this. This is more like the interest income that they will be generating. So let's put everything together. Let's call this one. Let's call this income measures. Okay. So let's just go to the output. But before we do that, let's let's have a credit here. Let's call this one income statements. So we could call it more like a concise income statements. And what we want to see is, hey, what is their interest income? Interest income. And what is their interest? Interest expense. Right. So this one will be additional. Why this one will be subtraction? Then we have their what? What do you call it? Net interest margin. I hope I'm correct. Net interest income. Hope I'm correct. Please. Actually, I'm wrong again. All right. So this will be like equal to. So it is more like a concise income statements. So we can link our what is our interest income? This is our interest income. What is my interest expense? I'll go up under my savings. I link that to my interest expense. Enter. Then my interest income is my interest income minus my interest expense. And this is your show. Our work. They will be generating some interest income. Right. So, okay. So one said that I'm correct more. Right. Right. Right. Right. So if they want to increase this interest income, then they will say, hey, what do we need to do? What do we need to do? And that's what they will reason behind you building this model. Now, prepare our repayments, which is the most important thing. That is where we need to spend a more time on. So here I'm going to, so I just decided to do that typically so that you understand it very well. Now, let's now, let's do that our repayments. So I'm going to give us two approaches, repayments. I'm sorry. Our repayments, repayments. So what is the period? So the period is saying, hey, loan period should be anybody we give loans should be for three months. That's for three months. Right. Three months, three months, three months, three months. Now, basically what he's saying is, hey, people that have taken loan, this loan of 1.1 that has been disbursed in this period would be repaid over months, over period of three months. So that means I'm saying he called to this guy divided by this guy. Right. Let me even keep that constant. So that means this, this morning will be divided. Let me see. Okay. So, okay. So that means what we are getting here will be divided by over three months. So this person will pay or we expect these people to pay back in the next three months. Now, let me ask us. Okay. So that's what we are saying. Right. Okay. Yes. Yes. I think that's correct. So we could decide that, hey, you know what? Let's work with the ending loan balance. But the same, we should work with the ending loan balance set. They're allowed to be flexible. So it doesn't make sense this or that. We now need to ask, hey, but we've already factor in non-performing loans here already. Right. So I feel we should work with the new loan disbursed. So which is we are saying this over period. The first approach is, hey, let's even assume this whole thing, everything will come back in the next three period. To do that, we now need to let me call this the repayment. And this one is loan period. So I said, okay, you know what? Hey, this person that is taking on the whole money will come back in the first three years. That's the first, more like the first approach. So to do that, we're going to use a formula we call offset. Offset. So in case you don't know about offset, you can't. So offset is more like, hey, I'm standing here and I want to go there. How do I move? Right. I hope you understand that. So hey, I'm standing here and I want to go there. How do I need to move? Right. How do I need to move? So that's that's what that is saying. So here I'm going to say equal to offset and offset of what this loan that has been disbursed for this period comma. So, hey, stand here and from here, I want you to move to the next column by three. Right. So first thing is comma. I don't don't move by row. Remember numbers are low, alphabet columns. Comma, then column, as I said, I wanted to move by the next three months, which means from here count the next one, two, three. That is where you're not giving this same result back. But remember, we are working it backward. So which means I'm saying this month of January, that means it is the loan that we've given out in the last three months that we are going to be getting back here. So that's why I need to put minus. Do that. It's reversed that. So open the bracket. That will not be my period, which I'm going to keep constant. Right. Let me put the bracket twice and press enter. So first month, not in second month, nothing. Right. Then third month, nothing. Then fourth month, look at what happened. Hey, you know what? Yes, we've given out our loan to this guy in this first month. And now it's going to pay back in this period. And if you look at that formula, just as I mentioned, hey, we are standing here. Go back to the last three months. But I've given those supposed to pay us back. Now you can see that, but now it's coming in in the fourth month. So which means I'll need to minus this my period minus one and press enter. So that's that funding just coming in months. Hey, this is what I give you down here. You are paying everything. I'm collecting my cash fully in this period. This guy that has taken his own, his own two will become the next three months. And you can see how that changes kind of flow. So let me call this repayment using, using offsets. That's function. Right. So offset is one very powerful tool in it. Right. It doesn't. Hey, I'm standing here. Move like this. Move like this. Move like that. So that's what that is saying. So if you come here and say equal to willing this directly to our repayment, enter. Right. Now you can see what we have. There are no any balance reduce significantly. And you can see that our net interest income is now at a significant loss. It's interwoven. One. That's one. Now if you are doing this, the next question is don't you think we are wrong? Because definitely we are not giving out a bullet depth because bullet depth is many is used by corporate organization where they take a loan and they just pay you some interest expenses by time they want to repay the principal. They pay everything all at once. We don't want that because you also need a very good cash management. Right. So which means this might not be 100% accurate. So what I'm going to do is I'm going to delete this. Let me delete it. Let me delete it. Now this will now take us to our next one, which is doing that dynamic loan repayments. Right. And I'm going to let me just create what I'm going to do is let me create a blank a blank Excel here, blank worksheet here. So we have how many months? We have 60 months. First thing is let me bring down my loan disbossed. So learn so far I can call this one. Let me call this control. I'll call it my control worksheet. I usually have something like that whenever I'm building my model. So here will be my loan disbossed. Right. Of course, so you understand the reason why I don't want to do it inside of my calculation. If you want to, yes, you can do that. You prefer that. So here, let me create a period here. Period can. So equal to this plus one. So I need how many we are building it for five years. So I need 60 months. Need that 60 months. I need that 60 months. But let me close my Excel at the end of that 60 months. This is for me to talk through that. Okay. Yes. So my disboss equal to I'll just link that to my calculations. This is the actual loan disbossed enter for that period. We have everything like this. So what is also my repayment period can also link that to that same calculation. So my repayment period. But it's three months. Right. So now that same period, let me recreate another period. So I want to create more like I'll call it a waterfall. Yes. A waterfall of a thing. Hey, person that have taken loan in this first month. When are you paying back? This year that you took your own loan in this period. When are you going to pay back? So that we can see how that's just kind of roll out. Right. So here, let me just create that same period again. So 60. So I'll now create it. I decide another period. So this will be one for let me work smart here. Right. So I think there's a formula that can help us. But let me let me let me let me let me let me be this. Let me be this easy to be so I'll go to this my few. Right. And I need serious. So this should be by rules. Right. You should stop at 60. And I'll click on. Okay. You know that should not be. I think that should be the other way around. Right. Here series. Maybe you should put it by columns and you should stop at 60. So yes. So so we have this. So one to 60 months. I will now need that at the same loan. Right. Our loan. Let me call this period. Period. Period. Then we have our loan. Now I'm not going to use transpose for let me try close my Excel here as well. Okay. So now we have everything. A hand. Okay. Perfect. So I'm not going to use transpose. Right. All this loan that we have here. I want to transpose it back here. I'm going to use. I like everything called to transpose on to all this my loan. This boss. I like everything close brackets. Press control shift enter. Let me open up everything. So what that means is this person has taken a loan this period. We need to pay back. Months one month two month three. Right. So which means one with one another one. Then present coming in yet to repay another one. Another one. Another one. Another one. The person that is taking in one three we pay another one. Another one. Another one. And you can see that this is what we call more like a waterfall repayment. Right. Now this is now what we want to open it. This is what we want to open it. Let me let me remove my line. Okay. Yes. So this is what we now want to create. Let me put a border across this and put a border across this. Right. And also the same thing here. We want to create that water for repayment approach. And to do this we are going to use a logical function in Excel. Logical function in Excel. That is what we are going to use. And we call this we use and function to equal to and I open my brackets. Right. The truth is and is still more like some of the basic form line Excel that you as a modeler that you need to understand and know how to use it. So and the first thing I want to test is this. My period that I have up here which I'm going to log the go because I'm going to copy it to that. Are you greater than or are you equal to this period that I have up here? This is where I have to create the period horizontal and vertical. Right. So let me even close the bracket and press enter. It's true because one is equal to this one that I have here. Right. But I'm saying hey one I have one here I have one here which is month and month and I'm saying hey this month are you greater than this month or you are equal to so if I come here and I press here so it's going to give me true and true is the same thing as one right first is the same thing as zero in Excel. So here you can see that yes true is definitely greater than this guy which is what that second thing is saying. That's one. At the second one which is I miss the loan. This person has taken loan and it has started. We now need to consider the second condition which now be equal to this same period up here keep the real constants. Now are you lesser than or are you equal to this time open up another brackets. Right. My loan period is I'm going to keep constant plus this same period that I have here which I'm going to keep the column constant. I know this more like some advancing but don't worry the recording will be shared with us. Right. Right. Enter close the brackets twice and press enter. Now but copy this. Now through here through here because number one here I have two here I have one so there's some things that are more of logical reasoning and that's more like the same concept we apply here. This supposed to be for three months. Right. It was to be for three months so which means at the end of the third period is supposed to pay everything. So which means I will need to come back to this my formula and now minus one from me so minus one enter and if I copy this can see in the third period everything is fully paid. Now see this impact. Let me multiply it by one. Let me multiply this by one. I said this is more like some advanced things. Right. And let me copy it down. You can see what we call this waterfall. The glass. I tell you everything just kind of fall. So hey this first three points. Hey this one is coming in. You start his own repayment this period this one. You start his own repayment this period this one is coming in starting his own repayment this period. But remember we are not using this one. Right. It's not one that we need. We need the actual amount. So I'll just come back here. Now I will now put everything that has given me this through our force. I'll put this in the brackets and now multiply by what for my brackets. This amount which I'm going to log the column divided by what divided by my loan period which I'm going to keep constant first the brackets and press enter. This on my dancing. This on my dancing right. The recording will also be shared with us so that we can take a look at this then and drag everything to the right and copy it down. In case we give us the true picture on how the loan will be repaid over period. So day one point one this person we start pay this percent this period this percent this present this period. So in case maybe the company wants to include some percent that hey if you take a loan maybe in the first month you pay 45 percent of it in the following period the page also percent in another period the page also percent your head. You can factor that in as well. But we're not getting to that route here because you want that you can reach out to us so we can get that right. So here now that we have this in case but we want to change this so let me put this in our link cell style so that anyone that comes in here will not think this is just a new value so they can understand this. So in case if you now decide let's even change this to six months. Six months enter you see automatically this automatically calculate and adjust. Okay you know what let's give them grace maybe anybody that take lunch should take it for four months. Four months enter and you see everybody but this will be changed from the input. So let me put this back to what we had previously three months. So just everything just what we missed oh no 10 months just they just put the 10 and you see the whole thing just calculate as a waterfall. Right so let me put it back to the three months that we have here so now we can now sum up our repayments. So let me bring this down so I can put my repayments here. So this is now our repayments. Our repayments will now be equal to summation of all the cash that is coming in in this period. Enter and now drag that for all the period that is what we now get as a what as our repayments that in that cash management so I can go back to my calculation right. So let me remove this. Let me remove the space that I created and this repayments. I'm not using this offset. I just just did you start so that you understand that hey this is more like one approach where they are using bullets but if the loan is amortized definitely they will be using that waterfall approach that I can come in that equal to come to that my control and link it to the repayments here. That's for the right to the right. And here we have this quantity that you can see here is if people are repaying but and what they have. So that this is where you now start making those adjustments. Making those adjustments. So right for this period the same the non-performing loan is way higher. So maybe you can adjust our non-performing loan to be more like a percent right of the previous one. So maybe you should use the approach previous multiply by multiply by that what our non-performing loan. Let's see that work. So so this this I do that just like I said it's not a one way thing. The reason why it's comedy is by time you see the output it's easy for you to go back to your input do the adjustment right. Take that in your calculation to make sure that hey this is making sense. So now here it seems the interest expense is way higher than the interest income right. And this is what we need to now start making necessary adjustments. So you all you need to now do this time you say come back to your input. With this this this savings yield is way too high maybe right now maybe we should give you set it as something like seven point five. How what would the effect be go to your calculation. You see that effect it increased significantly. Right. So maybe we need to reduce our loan that will be given out because that seems the interest expense is way higher than the interest income. Maybe we should increase the interest income. So we just start asking different questions here and there. So you know what maybe we should start increasing the number of our savings and all they need to do is to work with the input and the output with what we automatically adjust and that we enable decision making. Right. So big thanks to every one of us. I believe you gain one or two things from this. Our webinar cities. Yes sorry that we have to buy additional time. Right. So here I will be dropping my pain. I will be dropping my pain.