5. MDE OPEX

We now proceed to create our final submodel, which contains our operating expenses. 


OPEX

Operative Expensive (OPEX) are in our case modeled as the sum of the three nodes: "M&S", "R&D" and "G&A": (Marketing & Sales, Research and Development, General & Administrative)


Splitting costs into Personnel and Non-Personnel and their Projection

Once again, you have the chance to train ROLLFORWARD projections, this time also with transforming the personnel split into non-personnel split  with ADDEACH formula  as described in 3. MDE Product.

Try to use the description to create your functions and when ready, have a look at the solution

Nr. Node Description
1. M&S Personnel Cost

Switch the sign of 'Base Data'.'Base Data M&S', use 'Drivers'.'M&S Personnel Split' to calculate the personnel part of costs. Roll it forward afterwards with 'Drivers'.'Merit Increase' as a driver.

2. M&S Non-Personnel Cost

Transform the 'Drivers'.'M&S Personnel Split' into the non-personnel split. Apply the result to
'Base Data'.'Base Data M&S' to calculate the non-personnel costs. Project the result into the future with 'Drivers'.'Inflation' as driver.

3. R&D Personnel Cost

Same logic as 1 with nodes:
'Base Data'.'Base Data R&D'
'Drivers'.'R&D Personnel Split'
'Drivers'.'Merit Increase'

4. R&D Non-Personnel Cost

Sames logic as 2. with nodes:
'Drivers'.'R&D Personnel Split'
'Base Data'.'Base Data R&D'
'Drivers'.'Inflation'

5. G&A Personnel Cost

Same as 1. with nodes:
'Base Data'.'Base Data G&A'
'Drivers'.'G&A Personnel Split'
'Drivers'.'Merit Increase'

6. G&A Non-Personnel Cost

Same as 2. with nodes:
'Drivers'.'G&A Personnel Split'
'Base Data'.'Base Data G&A'
'Drivers'.'Inflation'

  Solution



Nr. Node fx
1. M&S Personnel Cost ROLLFORWARD(-1 * 'Base Data'.'Base Data M&S' * 'Drivers'.'M&S Personnel Split','Drivers'.'Merit Increase')
2. M&S Non-Personnel Cost ROLLFORWARD(-1 * 'Base Data'.'Base Data M&S' * ADDEACH('Drivers'.'M&S Personnel Split'*-1,1),'Drivers'.'Inflation')
3. R&D Personnel Cost ROLLFORWARD(-1 * 'Base Data'.'Base Data R&D' * 'Drivers'.'R&D Personnel Split','Drivers'.'Merit Increase')
4. R&D Non-Personnel Cost ROLLFORWARD(-1 * 'Base Data'.'Base Data R&D' * ADDEACH('Drivers'.'R&D Personnel Split'*-1,1),'Drivers'.'Inflation')
5. G&A Personnel Cost ROLLFORWARD(-1 * 'Base Data'.'Base Data G&A'*'Drivers'.'G&A Personnel Split','Drivers'.'Merit Increase')
6. G&A Non-Personnel Cost ROLLFORWARD(-1 * 'Base Data'.'Base Data G&A' * ADDEACH('Drivers'.'G&A Personnel Split'*-1,1),'Drivers'.'Inflation')


If entered correctly, your model should look somewhat like this:


Next Step

Now that you have created all five sub-models you should have a fully functional Profit model for a multinational diversified enterprise covering all three important areas (Product, Services, Operating Expenses). Let's combine it quickly into a final profit and loss model in P&L which won't take you more than 3 minutes. 

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