Introduction
(UPDATED!) I created this website in the late 1990's. I don't even really know when. I was working for a boutique investment firm until 1998, so it was sometime prior to that. "Boutique investment firm" typically means a firm owned by a single individually, usually someone with a personality disorder (in this case, not me, and no, the firm isn't around any more. Go figure.). I dramatically updated this website in 2002. Then I ignored it for many years while I slaved away on my startup. When I sold LandAndFarm.com in July 2008 (woot!) this site went offline. Now, in September 2009, I am putting it back online because I've had a few requests to do so. I may also update it to reflect changes in Excel and make it bit more robust. But I may also continue to waste my life playing World of Warcraft ("For the Alliance!").
I created this short course to help out some of my friends who had finance
questions, but couldn't find simple answers anywhere. I'm not an accountant and I'm pretty stupid, and everything on this site is
written for someone like me.
This is version 1.0. All errors are mine. If you rely solely on this site for financial decision-making, wow, you deserve whatever chaos ensues. Do not prepare food on this web-site. Here are the rules of finance:
Rule #1: You do not talk about Fight Club
Rule #2: You do not talk about Fight Club
Rule #3: Preparing financial statements and making financial models is an art. It is possible, even fun, to make financial statements say whatever you want. Bankrupt companies can look healthy. Healthy companies can look bankrupt. You can make a bad business plan have great numbers and a great business plan have bad numbers.
Millions of dollars are invested in crappy ideas with great numbers because investors know as little about financial models as anyone else. Creative accounting is the NORM, not the exception. If you don't believe me, ask Enron.
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A note on the spreadsheets seen on this website.
You need Internet Explorer 6.0 to see the spreadsheets on this site as they were intended to be viewed.
I use MS Excel for all my financial modeling. In the last 10 years, I've never met a financial analyst who used anything else. I wouldn't know, nor would I really care, how to do financial modeling with anything but Excel. I'm sure it can be done with Lotus. I'm sure it can be done with blood and parchment. I use Excel.
All the pages of the model work together. But because the web basically sucks, each page is presented on its own. You need to download the whole spreadsheet to see how the calculations link the financial statements together.
If you don't have MS Excel on your computer, you can still play with the spreadsheets on this web-site. If you can't see the spreadsheets on this web-site and you don't have Excel, you won't be doing much financial modeling.