Mastering Financial Modelling in Microsoft Excel 3rd edn

Alastair Dayhas worked in the finance industry for 20 years in treasury and marketing functions. In 1990 he established Systematic Finance as a consultancy and financial lessor concentrating on the computer and communications industries. Alastair has a degree in Economics and German from London University, an MBA from the Open University Business School, and is an associate lecturer in corporate finance with the OUBS. He is the successful author of several books including Mastering Cash Flow and Valuation Modelling, Mastering Risk Modelling and The Financial Director’s Guide to Purchasing Leasing.

Contents

Introduction – who needs this book?

Preface to the third edition 

Acknowledgements

Conventions

Executive summary

Part A  DEVELOPING FINANCIAL MODELS

 

1    Overview   

Introduction                     

What is financial modelling?

History of spreadsheets  

Power of spreadsheets  

Objectives for the book  

Example spreadsheet

Summary  

 

2    Design introduction  

Introduction

Basics of design

Objectives

User interface  

Key variables and rules  

Layout

Individual modules  

Menu structure and macros

Management reporting  

Future development

Testing

Protection  

Documentation  

Peer group comments

Summary  

 

3    Features and techniques

Introduction

Formats

Number format

Lines and borders  

Colours and patterns  

Specific colours for inputs and results

Data validation  

Controls – combo boxes and buttons

Conditional formatting  

Use of functions and types of function

Add-ins for more functions  

Text and updated labels

Record a version number, author, etc.  

Use names to make formulas easier to understand

Paste names as part of documentation  

Comment cells  

Graphics  

Dynamic graphs to plot individual series

Data tables

Scenarios  

Goal seek  

Solver 

Use of templates  

Summary  

 

4    Sample model

Introduction

Aims and objectives  

User needs and user interface  

Key variables and rules  

Breaking down the calculations into manageable groups

Setting up individual modules  

Menu structure  

Program sheets and macros

User assistance  

Summaries

Risk and multiple answers  

Testing and troubleshooting 

Protecting and securing  

Help and documentation  

Show to peers – take their advice

Control loop – listen, learn and modify

Summary  

 

5    Example model

Introduction

Case study  

Design

PPP 1

PPP 2

PPP 3

PPP 4

PPP 5

Documenting, testing and protecting  

PPP 6

Summary  

 

Part B  APPLICATIONS   

 

6    Analysing performance   

Introduction

Profit and loss  

Balance sheet  

Ratios

Trend analysis

Sustainability

Summary  

 

7   Cash flow

 

Deriving cash flow  

Net operating cash flow (NOCF)  

Free cash flow  

Cover ratios  

International cash flow 

Summary  

 

8    Forecasting models 

Introduction

Historic forecasts  

Trend lines  

Trend lines for analysis

Data smoothing

Cyclicality and seasonality

Summary  

 

9    Forecasting financials

Introduction