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Hands-On Financial Modeling with Excel for Microsoft 365

Hands-On Financial Modeling with Excel for Microsoft 365

By : Shmuel Oluwa
4 (5)
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Hands-On Financial Modeling with Excel for Microsoft 365

Hands-On Financial Modeling with Excel for Microsoft 365

4 (5)
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 Excel for Microsoft 365 explores financial modeling terminologies with the help of Excel. Starting with the key concepts of Excel, such as formulas and functions, this updated second edition will help you to learn all about referencing frameworks and other advanced components for building financial models. As you proceed, you'll explore the advantages of Power Query, learn how to prepare a 3-statement model, inspect your financial projects, build assumptions, and analyze historical data to develop data-driven models and functional growth drivers. Next, you'll learn how to deal with iterations and provide graphical representations of ratios, before covering best practices for effective model testing. Later, you'll discover how to build a model to extract a statement of comprehensive income and financial position, and understand capital budgeting with the help of end-to-end case studies. By the end of this financial modeling Excel book, you'll have examined data from various use cases and have developed the skills you need to build financial models to extract the information required to make informed business decisions.
Table of Contents (19 chapters)
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1
Part 1 – Financial Modeling Overview
4
Part 2 – The Use of Excel Features and Functions for Financial Modeling
8
Part 3 – Building an Integrated 3-Statement Financial Model with Valuation by DCF
15
Part 4 – Case Study

Chapter 8: Preparing a Cash Flow Statement

A wise man once said Turnover is vanity, profit is sanity, but cash is reality. An entity's profit and loss (P&L) account gives the result (profit or loss) of revenue activities during the year, and the balance sheet gives a snapshot of the assets, liabilities, and equity at the balance sheet date. However, both of these statements are affected by the accruals basis of accounting that seeks to ensure that all transactions that belong to the period under review are brought into the accounts for that period, irrespective of whether or not cash has changed hands. This means that you are likely to have turnover or sales or income that is not supported by cash inflow because some sales would have been made on credit and may would not yet have been paid for by the period end. This also affects purchases, inventory, and expenses that are either prepaid (such as rent and insurance) or accrued (such as electricity). Since the ability to settle...

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