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

Building assumptions

Financial modeling is all about projecting results or behavior into the future.

To do this, you will need to build up a set of assumptions to bridge the gap between actual performance and future results. Although you will need to project every single item in the model, your assumptions will focus on items that will have a material effect on the final results. Other non-material items can be projected as, say, percentage of turnover (for revenue items) or a best judgement figure (for balance sheet items).

Your assumptions will need to consider whether items will increase, decrease, or stay the same. How you calculate the projected change is referred to as the growth driver. For example, for revenue items, it could be inflation, year-on-year growth, or some other indicator.