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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Relative referencing

To avoid the aforementioned shortcomings, you should enter the cell references of the cells containing the values, rather than typing the actual values, as shown in the following screenshot:

The formula bar in the preceding screenshot shows that we entered F5*I5.

In this way, it is clear where the input is coming from. All the cells that have formulas that refer to those cells will be automatically updated.

Another advantage of referencing is that, by default, Excel registers the position of the cell references relative to the active cell. So, in the preceding example, F5 is registered as four cells to the left, and I5 is registered as one cell to the left of the active cell, J5.

The relevance of this is that, when you copy that formula to another location, Excel remembers the positions of the original cell references included in the formula, relative to...