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

Definitions of financial models

Wikipedia considers a financial model to be a mathematical model that represents the performance of a financial asset, project, or other investments in abstract form.

Corporate Finance Institute believes that a financial model facilitates the forecasting of future financial performance, by utilizing certain variables to estimate the outcome of specific financial decisions.

Business Dictionary agrees with the notion of a mathematical model in that it comprises sets of equations. The model analyzes how an entity will react to different economic situations with a focus on the outcome of financial decisions. It goes on to list some of the statements and schedules you would expect to find in a financial model. Additionally, the publication considers that a model could estimate the financial impact of a company's policies and restrictions put in place by investors and lenders. It goes on to give the example of a cash budget as a simple financial model.

eFinance Management considers a financial model to be a tool with which the financial analyst attempts to predict the earnings and performance of future years. It considers the completed model to be a mathematical representation of business transactions. The publication names Excel as the primary tool for modeling.

Here's my personal definition:

"A financial decision making a situation prompts the creation of a mathematical model to facilitate the decision making. Preferred courses of action and their consequences are based on the results of the calculations performed by the model."