Financial Modelling Handbook

Financial Modelling Handbook

Latest — Jan 30, 2023

A note on beta readers

I think I may have created some confusion with my last post when I mentioned beta readers. I've had quite a few of you message me or leave comments being asked to be added to the list of beta readers. Please allow me to give you some context. I started

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Dare I say "nearly there"?

I've been thinking that we are nearly there for weeks now. But we really are nearly there. After my last update, we split the book into two volumes as it was just too big. Once we got the new version back from the designer, we realised it was a terrible

Q&A: What are some of the ways to upstream cash?

Hi Kenny, so what are some ways to upstream cash when there is that cash trap due to the difference between net income and cash flows? Jason Hi Jason, There are a few options that are typically used. These methods are common in Project Finance especially. 1. Shareholder loan. Putting

Q&A: What does "arms-length interest rate" mean in the context of thin capitalisation?

Please could you explain the meaning of a "reasonable arms-length interest rate" test and how this differs to other possible tests? I can't see this detail covered anywhere. Many thanks in advance. David Hi David. Thanks for the question. Let me start by saying I'm not a tax expert or

Q&A: Why does copy across stop?

Hi Kenny, I can successfully create links for "Compound degradation" and "seasonality adjustment". However, in both cases, when I click Ctrl + Shift + a, the macro only copies across the next two columns (which are the constant and unit columns). When I enter the formula for electricity generation and use Ctrl

Q&A: How do I prevent the review tool from turning my model green?

Hi Kenny, First of all thanks a lot for this great course, already of great help in better understanding and reviewing models! I have a practical question, when using comments mine are turning the cell bright green (placing a comment with Ctrl + Alt +q). Is there a way to avoid

Q&A: Why does my balance sheet not balance when I introduce an RCF balance?

Hello, I thank you very much for your work teaching us with great precision the financial modelling tools. I have a question : The initial RCF balance is currently 0 in the model, but if I put an initial RCF balance of 10,000, then it will have an imbalance on

Q&A: Alternative formula for compound degradation

Hello there, My understanding of degradation is that the first year we operate at 100% capacity and then we loose each year the percentage capacity that is in cell F10. If this is correct i came up with another formula: J12*(1-(J11-1)*$F$10) So this basically is the

How to track changes in your financial model

The lifetime of a financial model can be surprisingly long. And over that lifetime, lots will change. You'll likely have multiple versions of the files with numerous changes between each version. The output sheet is useful for tracking how the numbers produced by the model change. We also need a

How to set up a Change Log sheet in your model

The Change Log sheet gives you a process for structured tracking of changes to your model. Hopefully, in the future, this will become redundant when Microsoft implements proper change tracking in Excel. This Chapter covers setting up the Change Log sheet. Once the sheet is set up, read the Change