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Hands-On Financial Modeling with Microsoft Excel 2019

By : Shmuel Oluwa

2.9 (8)

Buy this Book

Hands-On Financial Modeling with Microsoft Excel 2019

2.9 (8)

By: Shmuel Oluwa

Buy this Book

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

Who this book is for

What this book covers

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Free Chapter

Section 1: Financial Modeling - Overview

Introduction to Financial Modeling and Excel

The main ingredients of a financial model

Understanding mathematical models

Definitions of financial models

Types of financial models

Alternative tools for financial modeling

Excel – the ideal tool

Summary

Steps for Building a Financial Model

Discussions with management

Building assumptions

Building a template for your model

Historical financial data

Projecting the balance sheet and profit and loss account

Additional schedules and projections

Cash flow statement

Preparing ratio analysis

Valuation

Summary

Section 2: The Use of Excel - Features and Functions for Financial Modeling

Formulas and Functions - Completing Modeling Tasks with a Single Formula

Understanding functions and formulas

Working with lookup functions

Utility functions

Pivot tables and charts

Pitfalls to avoid

Summary

Applying the Referencing Framework in Excel

Introduction to the framework

Relative referencing

Absolute referencing

Mixed referencing

Implementing the referencing framework

Summary

Section 3: Building an Integrated Financial Model

Understanding Project and Building Assumptions

Understanding the nature and purpose of a project

Conducting interviews

Building assumptions

Summary

Asset and Debt Schedules

Understanding the BASE and corkscrew concepts

Asset schedule

Approaches to modeling assets

Debt schedule

Creating a loan amortization schedule

Summary

Cash Flow Statement

Introduction to the cash flow statement

Items not involving the movement of cash

Net change in working capital

Balancing the balance sheet

Creating a quick cash flow statement

Summary

Valuation

Absolute valuation

Relative valuation – comparative company analysis

Summary

Ratio Analysis

Understanding the meaning and benefits of ratio analysis

Learning about the various kinds of ratios

Interpreting ratios

Understanding the limitations of ratio analysis

Using ratios to find financially stable companies

Summary

Model Testing for Reasonableness and Accuracy

Incorporating built-in tests and procedures

Troubleshooting

Understanding sensitivity analysis

Using direct and indirect methods

Understanding scenario analysis

Creating a simple Monte Carlo simulation model

Summary

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Valuation

There are two main approaches to valuation, which are as follows:

Relative approach: In this approach, you have the following methods:
- The comparative company method of valuation: This method obtains the value of a business by looking at the value of similar businesses and their trading multiples, the most common of which is enterprise value (EV) and earnings before interest, tax, depreciation, and amortization (EBITDA), where EV is divided by EBITDA.
- The precedent transaction method: Here, you compare the business to other similar businesses in the industry that have recently been sold or acquired. Again, you can use multiples to derive a value for your business or company.

Absolute approach: This approach estimates all future free cash flow of the company and discounts it back to today. It is called the discounted cash flow (DCF) method. Essentially, the approach...