Excel Financial Modeling (Course #4030) Table of Contents Page

Transcription

1 Excel Financial Modeling (Course #4030) Table of Contents Chapter 1: What is Financial Modeling? 1 What s the Difference between a Spreadsheet and a Financial Model? 3 Types and Purposes of Financial Models 4 Tool Selection 5 What Skills Do you Need to Be a Good Financial Modeler? 10 The Ideal Financial Modeler 15 Summary 19 Review Questions & Solutions 20 Chapter 2: Building a Model 23 Model Design 23 The Golden Rules for Model Design 25 Design Issues 26 The Workbook Anatomy of a Model 27 Project Planning Your Model 29 Model Layout Flow Charting 30 Steps to Building a Model 31 Information Requests 38 Version-Control Documentation 39 Summary 40 Review Questions & Solutions 41 Chapter 3: Best Practice Principles of Modeling 44 Document Your Assumptions 44 Linking, Not Hard Coding 44 Only Enter Data Once 45 Avoid Bad Habits 45 Use Consistent Formulas 46 Format and Label Clearly 46 Methods and Tools of Assumptions Documentation 47 Linked Dynamic Text Assumptions Documentation 53 What Makes a Good Model? 56 Summary 57 Review Questions & Solutions 58 Chapter 4: Financial Modeling Techniques 61 The Problem with Excel 61 Error Avoidance Strategies 62 How Long Should a Formula Be? 67 Linking to External Files 69 Building Error Checks 72 Avoid Error Displays in Formulas 75 Circular References 75 Summary 79 Review Questions & Solutions 80 Table of Contents - 1

2 Chapter 5: Using Excel in Financial Modeling 83 Formulas and Functions in Excel 83 Excel Versions 86 Handy Excel Shortcuts 86 Basic Excel Functions 91 Logical Functions 95 Nesting: Combining Simple Functions to Create Complex Formulas 97 Cell Referencing Best Practices 100 Named Ranges 102 Summary 105 Review Questions & Solutions 106 Chapter 6: Functions for Financial Modeling 109 Aggregation Functions 109 LOOKUP Formulas 116 Other Useful Functions 124 Working with Dates 133 Financial Project Evaluation Functions 138 Loan Calculations 143 Summary 148 Review Questions & Solutions 149 Chapter 7: Tools for Model Display 151 Basic Formatting 151 Custom Formatting 151 Conditional Formatting 157 Sparklines 162 Bulletproofing Your Model 165 Customising the Display Settings 168 Form Controls 175 Summary 188 Review Questions & Solutions 189 Chapter 8: Tools for Financial Modeling 191 Hiding Sections of a Model 191 Grouping 196 Array Formulas 197 Goal Seeking 202 Pivot Tables 204 Macros 208 User-Defined Functions (UDFs) 216 Summary 218 Review Questions & Solutions 219 Table of Contents - 2

3 Chapter 9: Common Uses of Tools in Financial Modeling 221 Escalation Methods for Modeling 221 Understanding Nominal and Effective (Real) Rates 226 Calculating Cumulative Totals 230 How to Calculate a Payback Period 230 Weighted Average Cost of Capital (WACC) 234 Building a Tiering Table 237 Modeling Depreciation Methods 240 Break-Even Analysis 249 Summary 255 Review Questions & Solutions 256 Chapter 10: Model Review 259 Rebuilding an Inherited Model 259 Auditing a Financial Model 268 Appendix 10.1: QA Log 273 Summary 274 Review Questions & Solutions 275 Chapter 11: Stress-Testing, Scenarios, and Sensitivity Analysis in Financial Modeling 277 What s the Difference between Scenario, Sensitivity, and What-If Analysis? 277 Overview of Scenario Analysis Tools and Methods 279 Advanced Conditional Formatting 287 Comparing Scenario Methods 290 Summary 300 Review Questions & Solutions 301 Chapter 12: Presenting Model Output 303 Preparing an Oral Presentation for Model Results 303 Preparing a Graphic or Written Presentation for Model Results 304 Chart Types 306 Working with Charts 319 Handy Charting Hints 324 Dynamic Range Names 326 Charting with Two Different Axes and Chart Types 328 Bubble Charts 331 Waterfall Charts 336 Summary 345 Review Questions & Solutions 346 Table of Contents - 3

4 Notes 348 Glossary 349 About the Website 351 Index 352 Final Exam NOTICE This course and test have been adapted from supplemental materials and uses the materials entitled Using Excel for Business Analysis, A Guide to Financial Modelling Fundamentals 2012 by Danielle Stein Fairhurst. Displayed by permission of the publisher, John Wiley & Sons, Inc., Hoboken, New Jersey. All rights reserved. This course is sold with the understanding that the publisher is not engaged in rendering legal, accounting, or other professional advice and assumes no liability whatsoever in connection with its use. Since laws are constantly changing, and are subject to differing interpretations, we urge you to do additional research and consult appropriate experts before relying on the information contained in this course to render professional advice. Sequoia CPE, LP 2014 Program publication date 6/24/13 About the Author Danielle Stein Fairhurst is the principal of Plum Solutions, a Sydney-based financial modeling consultancy. With her talent for analytical modeling and professional approach, Danielle helps her clients create meaningful financial models for business analysis. Over past decades she has worked in a number of industry sectors, including telecoms, information systems, manufacturing, and financial services, with solutions such as business cases, pricing models, and management reports. She is regularly engaged as a speaker, facilitator, and consultant around Australia and globally. She holds a master of business administration (MBA) from Macquarie Graduate School of Management, and has taught management accounting subjects at Sydney University. Danielle lives in Sydney with her husband and two children, but travels widely and enjoys the challenge of balancing a healthy family lifestyle with her passion for financial modeling pedagogy. Table of Contents - 4

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