SPECIALISTS IN FINANCIAL MODELLING

Five Rules for Building Impressive Excel Dashboards

Dashboard reports allow managers & executives to get a high-level overview of the business in one snapshot. When it comes to making dashboards, Excel is an excellent choice. You can create powerful, insightful and good looking dashboards using Excel, thanks to features like Pivot Tables, Formulas, Charts and simple UI (user interface).
Today, I want to share with you five rules that can make your Excel dashboards impressive.

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Should you use Macros in Financial Modelling?

Whilst it’s not necessary to become a super VBA programmer in order to be a good financial modeller, it’s not a bad idea to have a working knowledge of macros – and the language they are built in, Visual Basic for Applications (VBA).   The best sort of financial model uses the simplest tools, and introducing macros to a financial model brings a whole new level of complexity.  For example, users wanting to run your macro will need to their security settings in order to allow macros to run, and if you are u
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Are you a Generalist or a Specialist Financial Modeller?

One of the fantastic things about financial modelling is that it is applicable across so many different industries.  Good financial modelling skills will always stand you in good stead no matter which industry or country you are working in!  A financial modelling consultant or generalist will prob
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Which LOOKUP?

LOOKUP functions, especially VLOOKUPs are very commonly used in financial modelling – sometimes a little too commonly used!  Knowing when and how to use them – and use them well is a critical skill for any financial modeller.   Let’s explore some of the problems with LOOKUP functions and how to make their more robust.

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How Long Does it Take to Build a Financial Model?

Whether you are a consultant building a model for a client, or an internal modeller, you or the person who has commissioned the model build will – understandably – want to know how long it will take. The answer is never straight-forward, as like many other tasks it really depends on how long you have got (and there’s never enough time!) and how much detail you need to go into.  The more time you’ve got, the better the model will be! Some models could take months and months of dedicated work, or you could throw together a very high level model in a day or two.

In a high level model, the assumptions would probably only estimates, as you won’t have had time to validate them with stakeholders, and the calculations will be pretty rough. You also might not have much in the way of fancy colours, formatting, drop-down boxes or tick boxes etc, but the numbers should still be reasonably accurate.

Building a Model Under Pressure

It’s a critical point to remember that even when under immense time pressure, the modeller should never compromise on good working practices. Even in a high level model, best practice should still be followed, correct labeling and documentation of assumptions should be maintained. See Best Practice in Financial Modelling for some guidelines on good practice. If these points have been adhered to, there should be surprisingly little difference in the base numerical outcome between a high-level model that takes a few days, and a detailed model which could take months. If pressed for time, cosmetic features such as those shown below can be omitted.

Time permitting, the detailed model may show:

  1. Detailed assumptions documentation, validated by key project stakeholders
  2. Scenarios and sensitivity analysis, using drop-down boxes, tick boxes or data tables
  3. Table of contents or navigation tools
  4. Colours and formatting, conditional formatting, insertion of company logos
  5. Output summary and detailed analysis of output

Time should be spent on “quick wins” – use your judgement to spend your time on calculations that are material to the model. Don’t waste time on validating minor assumptions which are not material to the outcome of the model.

This article is an extract from the book “Using Excel for Business Analysis” by Danielle Stein Fairhurst

Best Practice in Financial Modelling

Whilst not the most sexy topic for a blog article, this is probably the thing that I’m asked most about by clients.  Because many modellers are self-taught, a lot of them don’t necessarily adhere to best practice.  Or perhaps they do – but don’t realise why they are doing it! I thought it might be helpful to lay out my views on the topic, and as always, I’d welcome any reader input…

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Happy New Year! Which version of Excel are you using?

Seeing as we’re now heading into 2011 I’m interested to know which version of Excel most users are on.  It’s been a while since any research was done on the topic, so I decided to set up a Linked In Poll to canvass our subscribers on the subject.  I think we’ll be surprised to see how many users are still on 2003!

Take the Poll

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