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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Absolute referencing

Sometimes, you will have a formula that contains a reference that you don't want Excel to modify when you copy the formula. For example, let's say we want to calculate commission on sales for each salesperson. This would be Sales × Commission.

As we move down the list, the row number changes so that the reference to the sales that are made by the salespersons moves from H5 to H6, to H7, and eventually to H20, which is the last record in our list.

However, the same commission percentage, which is in cell H2, applies to all salespersons. Thus, when we copy down the list, we need to retain the cell reference, H2, and so we need to lock the cell reference or make it absolute.

We do this by putting the \$ sign before the column and row parts of the reference. By doing this, H2 becomes \$H\$2.

Instead of typing them in, Excel allows you to press the...