Book Image

Hands-On Financial Modeling with Microsoft Excel 2019

By : Shmuel Oluwa
Book Image

Hands-On Financial Modeling with Microsoft Excel 2019

By: Shmuel Oluwa

Overview of this book

Financial modeling is a core skill required by anyone who wants to build a career in finance. Hands-On Financial Modeling with Microsoft Excel 2019 explores terminologies of financial modeling with the help of Excel. This book will provides you with an overview of the steps you should follow to build an integrated financial model. You will explore the design principles, functions, and techniques of building models in a practical manner. Starting with the key concepts of Excel, such as formulas and functions, you will learn about referencing frameworks and other advanced components for building financial models. Later chapters will help you understand your financial projects, build assumptions, and analyze historical data to develop data-driven models and functional growth drivers. The book takes an intuitive approach to model testing and covers best practices and practical use cases. By the end of this book, you will have examined the data from various use cases, and have the skills you need to build financial models to extract the information required to make informed business decisions.
Table of Contents (15 chapters)
Free Chapter
Section 1: Financial Modeling - Overview
Section 2: The Use of Excel - Features and Functions for Financial Modeling
Section 3: Building an Integrated Financial Model

Net change in working capital

Let's look at the following screenshot on the net change in working capital:

This section converts our profit from the accrual basis into cash-based profit. In simple terms, taking our previous example, we have recorded a sale of N100,000, increasing our profit by that amount even though no cash was received. This section looks at the corresponding increase in accounts receivable of N100,000 and treats it as an outflow to be deducted before arriving at cash flow from operating activities, hence reversing the inflow recorded from the credit sale.

In summary, under this section, we add increases in working capital liabilities and subtract increases in working capital assets. An increase is manifested when we subtract the current year's figure from the previous year's, assuming that this year's figure is higher than that of the previous...