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

Understanding the BASE and corkscrew concepts

These are common standards to follow in modeling our balance sheet items. BASE is an acronym that stands for beginning add additions less subtractions equals end. The corkscrew concept refers to the way in which the base setup is connected from one period to the next. In the following screenshot, we will see that the closing balance from one year is carried forward as the opening balance of the next year:

We notice that the movement is from the opening balance, which goes down the rows of the first year to the closing balance, then back up to the opening balance of the second year, then down the rows of the second year, and so on. This creates a corkscrew effect, as seen in the following screenshot: