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Index
Title Page
Copyright and Credits
Hands-On Financial Modeling with Microsoft Excel 2019
Dedication
About Packt
Why subscribe?
Contributors
About the author
About the reviewers
Packt is searching for authors like you
Preface
Who this book is for
What this book covers
To get the most out of this book
Download the example code files
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Conventions used
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Reviews
Section 1: Financial Modeling - Overview
Introduction to Financial Modeling and Excel
The main ingredients of a financial model
Investment
Financing
Dividends
Understanding mathematical models
Definitions of financial models
Types of financial models
The 3 statement model
The discounted cash flow model
The comparative companies model
The merger and acquisition model
The leveraged buyout model
Loan repayment schedule
The budget model
Alternative tools for financial modeling
Advantages of Excel
Excel – the ideal tool
Summary
Steps for Building a Financial Model
Discussions with management
Gauging management expectations
Knowing your client's business
Department heads
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
The VLOOKUP function
The INDEX function
The MATCH function
The CHOOSE function
Implementing the CHOOSE function
Utility functions
The IF function
The MAX and MIN functions
Implementing the functions
Pivot tables and charts
Implementing pivot tables
Pitfalls to avoid
Protect sheets
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
Historical data
Building assumptions
General assumptions
Profit and loss and balance sheet assumptions
Profit and loss account growth drivers
Year-on-year growth
Compound annual growth rate
Balance sheet growth drivers
Days of inventory
Debtor days
Creditor days
Summary
Asset and Debt Schedules
Understanding the BASE and corkscrew concepts
Asset schedule
The straight line method
The reducing balance method
Approaches to modeling assets
The detailed approach
Asset and depreciation schedule
The simple approach
Debt schedule
The complex approach
The simple approach
Creating a loan amortization schedule
Creating the template
Creating the formulas
Using the schedule
Summary
Cash Flow Statement
Introduction to the cash flow statement
Items not involving the movement of cash
Net change in working capital
Cash flow from investment activities
Cash flow from financing activities
Balancing the balance sheet
Troubleshooting
Circular references
Creating a quick cash flow statement
Summary
Valuation
Absolute valuation
Free cash flow
Time value of money
Weighted average cost of capital
Terminal value
Calculating the present value
Relative valuation – comparative company analysis
Trading comparatives
Precedent transaction comparative
Summary
Ratio Analysis
Understanding the meaning and benefits of ratio analysis
Learning about the various kinds of ratios
Liquidity ratios
Efficiency ratios
Return on average assets
Return on average capital employed
Return on average equity
Debt-management 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
The direct method
The indirect method
Understanding scenario analysis
Creating a simple Monte Carlo simulation model
Summary
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