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
1
Section 1: Financial Modeling - Overview
4
Section 2: The Use of Excel - Features and Functions for Financial Modeling
7
Section 3: Building an Integrated Financial Model

Summary

In this chapter, we have looked at three different methods of valuation:

  • Absolute valuation using the discounted cash flow method
  • Relative valuation using trading comparatives
  • Relative valuation using transaction comparatives

We have learned that the DCF method is widely accepted as the most accurate, but because of its simplicity and ease of application, relative valuation is also popular among investment analysts. We have seen that there is no one correct answer; rather, we arrive at a range of results that give us a range within which the share price should fall. We have also learned how to create a football field chart to display our results and have learned how to interpret them in a meaningful way.

In the next chapter, Model Testing for Reasonableness and Accuracy, we will test our model to see how it responds to changes in certain key variables. We will also...