Building Financial Models

Front Cover
McGraw Hill Professional, Apr 12, 2009 - Business & Economics - 464 pages

The ability to effectively create and interpret financial models is one of the most valued skills in corporate finance--from Wall Street to Main Street. Now, the acclaimed guide to designing, building, and implementing valuation projection models is fully revised and expanded to keep finance and accounting professionals competitive in today's marketplace.

This second edition of Building Financial Models continues the tradition of its predecessor by providing a hands-on approach to creating a core model that is supported by broad coverage of cornerstone accounting and finance principles. Additionally, this updated volume features:

  • Entirely new coverage of discounted cash flow (DCF) modeling
  • Excel formulas for making powerful calculations within the spreadsheet
  • In-depth explanations of both the principles and mechanics of projection models

Building Financial Models helps readers practice good thinking and apply sound knowledge of their tools--two key attributes to producing robust and easy-to-use models. This practical guide takes you step by step through the entire process of developing a projection model, with a full chapter dedicated to each phase. By the end, you will have a working, dynamic spreadsheet financial model for making projections for industrial and manufacturing companies.

Furthermore, this Second Edition provides the vocabulary and syntax of model building so you can tailor core models to fit any size company and allow for quick input changes to test sensitivity. The companion website www.buildingfinancialmodel.com offering example spreadsheets will give you a head start on developing your own models.

A flexible and successful financial projection model does more than just add numbers--it explains the complex relationships between those numbers and illuminates ways to use those associations to add value to an enterprise. Building Financial Models is the only book you need to create and implement a fluid financial projection model that is both state of the art and user friendly.

 

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Contents

Chapter 1 A Financial Projection Model
1
Chapter 2 Best Practices
15
Chapter 3 Setting the Stage
29
Chapter 4 Accounting for Modeling
65
F Keys and Ranges
83
Functions
107
Chapter 7 Building a Pilot Model
159
Chapter 8 Circular References and Iterative Calculations
171
Chapter 13 The Cash Sweep
269
Chapter 14 Ratios
313
Chapter 15 Forecasting Guidelines
335
Chapter 16 Discounted Cash Flow Valuation
345
Chapter 17 Introduction to Visual Basic for Applications
365
Chapter 18 A VBA Primer
379
Chapter 19 Tips and Tricks
409
Abbreviations
437

Chapter 9 Variations on Balancing Plugs
199
Chapter 10 Preparing to Build a Full Model
209
Part 1
225
Chapter 12 The Cash Flow Statement
255
Index
439
About the Author
450
Copyright

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About the author (2009)

John S. Tjia is a founding partner of TMG Associates, LLC, a consulting firm that specializes in financial modeling for corporate finance. A former vice president at JPMorgan Chase, he has taught modeling and valuation classes to hundreds of analysts and associates.

Bibliographic information