#### 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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# Troubleshooting

In the event that there is an error, there are certain steps you can take to quickly eliminate several possibilities:

• Precedents: Precedents are those cells that have been referred to in arriving at the value in a particular cell
• Dependents: Dependents are those cells that have included the cell in focus in their formula

The following screenshot will be used to explain this further:

From the preceding screenshot, let's look at cell K8. The formula in that cell is =K6*(1-\$D\$7), so cells K6 and D7 are the precedents of cell K8. On the other hand, cell K8 is a dependent of both cells K6 and D7.

On the Formula ribbon, in the Formula Auditing group, selecting Trace Precedents or Trace Dependents reveals thin blue arrows linking a cell to either its precedents or its dependents, accordingly.

The following screenshot shows us how we can use Excel to visualize...