Mastering Financial Modelling in Microsoft Excel: A practitioner's guide to applied corporate finance

by Day, Alastair

• ISBN13: 9780273643104
• ISBN10: 027364310X
• Additional ISBN(s): 9780273708063
• Edition: CD
• Format: Paperback w/CD
• Copyright: 2007-01-01
• Publisher: Ft Pr
• More Book Details
• Purchase Benefits

Summary

Mastering Financial Modelling is a practical book and disk combination that will help finance professionals and business students alike to become more proficient in building Microsoft Excel models and applying corporate finance concepts.

Table of Contents

Introduction--who needs this book?	ix
Acknowledgements	xi
Conventions	xiii
Executive summary	xv
Part A DEVELOPING FINANCIAL MODELS
Overview	3	(6)
Design introduction	9	(9)
Features and techniques	18	(40)
Sample model	58	(20)
Example model	78	(23)
Part B APPLICATIONS
Analysing performance	101	(15)
Cash flow	116	(6)
Forecasting models	122	(9)
Forecasting financials	131	(14)
Variance analysis	145	(8)
Breakeven analysis	153	(10)
Portfolio analysis	163	(9)
Cost of capital	172	(14)
Bonds	186	(13)
Investment analysis	199	(19)
Risk analysis	218	(24)
Depreciation	242	(13)
Leasing	255	(24)
Company valuation	279	(17)
Optimization	296	(16)
Decision trees	312	(11)
Risk management	323	(28)
Modelling checklist	351	(4)
Appendices	355	(8)
Bibliography	363	(2)
Index	365

Excerpts

Introduction--Who Needs This Book? I was introduced to Microsoft Excel about 15 years ago when a client asked me to prepare a lease versus purchase analysis to prove that leasing was indeed more beneficial than purchasing. I spent much of the following weekend developing a Basic program to provide an after-tax net present value for both options. The client produced his own Lotus 1-2-3 model and while we both derived similar answers, the development time for the spreadsheet was only a couple of hours. After this experience, I began to use Lotus 1-2-3 to review funding alternatives, lease pricing and portfolio cash flows. As spreadsheets have become more powerful, I have increased the scope of models and improved my own approach and design, which has had benefits in development time and accuracy. It is this personal approach which is outlined in this book and disk combination. The success of spreadsheets, especially since the introduction of Office 95, means that most managers have Microsoft Excel as part of their desktop. Yet few receive specific training in modelling procedures just as few business schools teach Excel as a core part of their curriculum. Managers achieve a certain standard, but this means that many spreadsheet models are: incomprehensible except to the author contain serious structural errors not able to be audited without a great deal of effort not maintainable or flexible enough to be developed further failing in their key objectives The simplicity of Excel means that models can be written 'on the fly' with no thought to any of the above problems. Excel is a sophisticated tool and I would argue that it should be a core skill for managers to produce clear maintainable applications and be proficient in spreadsheet design. There is much management writing about 'empowering individuals' and providing them with 'decision tools' and Excel can assist in providing solutions. This is what I call 'Applied Financial Excel,' which brings together: financial skills modelling design methodology This book will provide managers with an approach not covered in corporate finance textbooks or Excel manuals. The objective here is to write a practical book to help users, rather than yet another book on financial mathematics or Excel functions. The first part of the book discusses design methodology and features for improving model design. The second part of the book provides templates for solving particular corporate finance problems and includes briefly the underlying theory. As added bonus, the book contains a CD containing all the software introduced in the book. The book is aimed at groups with differing levels of responsibility: CFOs and finance directors financial controllers analysts accountants corporate finance personnel treasury managers risk managers middle office staff general managers personnel in banks, corporates and government who make complex decisions and who could benefit from a modelling approach academics, business and MBA students How to Use This Book Install the Excel application templates using the simple SETUP command. The files are named by subject and referenced in each chapter. Work through each of the chapters and the examples. Use the book, spreadsheets and templates as a reference guide. There is a complete list of titles together with their relevant chapters in Appendix Three. Apply the design methodology to all your models and applications. Practise and improve your efficiency and competence with Excel.