#### 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.
Preface
Free Chapter
Section 1: Financial Modeling - Overview
Introduction to Financial Modeling and Excel
Steps for Building a Financial Model
Section 2: The Use of Excel - Features and Functions for Financial Modeling
Formulas and Functions - Completing Modeling Tasks with a Single Formula
Applying the Referencing Framework in Excel
Section 3: Building an Integrated Financial Model
Understanding Project and Building Assumptions
Asset and Debt Schedules
Cash Flow Statement
Valuation
Model Testing for Reasonableness and Accuracy
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# Incorporating built-in tests and procedures

A financial model, by its very nature, is full of formulas and calculations. Although most of them are simple, their volume and repetitiveness create an exposure to errors that could give the most accomplished modeler nightmares when trying to track them down.

The following are some of the procedures to adopt in your model in order to reduce this exposure:

• Hardcoded cells: These should be distinguished by using a blue font. The following screenshot shows hardcoded cells in a blue font, to distinguish them from calculated cells, which are in the standard black font:

If a model has to be modified, it is these hardcoded cells that will need to be adjusted to effect the required change. Using the blue font reduces the time it will take to navigate to the cells that need to be modified.

• Balance check: Creating a balance check for the...