Circular references Cash flow planning

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darsid
darsid Member, ALL USERS, GroupMember, Partner Posts: 1 New Contributor
in Planning & Modeling

Hello!

The model that I’m building for the client includes circular reference. I need to calculate the amount of the loans  and net debt that depend on the Free cash flow sum for the period. Free cash flow at the same time includes interests paid, that is calculated for the net debt. When i'm changing any parametrs that effects FCF net Debt and interests is changing according to this for the current and future years. In Excel it’s calculates with Enable iterative calculation option on. Does anyone could help me with solutions and best practices for this case in Anaplan? I suppose it’s a common case with financial planning models.

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  • jdolich
    jdolich Member, ALL USERS, Community Member, Certified Model Builder Posts: 5 Occasional Contributor

    +1 Kuddo for this question.  It's one that I spent a lot of time with when I first started building planning models for merchandis planning (retail industry).

     

    Quick answer:

    There's no easy way to solve your problem using Anaplan unless there is an underlying equation that can be defined.  I've not had much luck with trying to find optimal solutions. 

     

    Longer answer:

    I couldn't tell precisely what you were trying to accomplish but it looked like you are discounting loans and FCF across time which means there's an underlying equation.  Below is a job aid I created for our company that helps explain the different kinds of circular references:

    • Algebraic - Same number of equations as unknowns. Anaplan can handle great.
    • Circular - Multiple editable line items for same equation.  Anaplan is okay, but you will need to add a lot of line items.
    • Operations Research (optimal solves) - Anaplan not so great for these.

    Here's a handy diagram to help explain these three.

    Anaplan Circular.PNG

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