#### 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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# Approaches to modeling assets

There are two approaches to modeling fixed assets, which are as follows:

• The detailed approach
• The simple approach

# The detailed approach

The detailed approach is preferred and is a more precise method that looks at the components of fixed assets—the costs of the assets, additions, disposals, depreciation, and accumulated depreciation. Your discussions with management will give you an idea of their CapEx plans over the next five years. Where there is a disposal or sale, a fixed asset has to be removed from the books. The net book value (accumulated depreciation) of that asset will be transferred to a disposal account as a debit and the proceeds of the sale will be transferred to the same...