Steve's Financial Modeling Tutorial

 

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(UPDATED!) I wrote this website in the late 1990's and updated it in 2002. It is now 2009 and Excel has dramatically changed. The basic concepts are the same, but the workspace modifications below are outdated. You'll have to figure it out yourself. The absolute/relative referencing tip at the bottom of this page still works.

A note on the spreadsheets seen on this website.

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 can't see the spreadsheets on this web-site and you don't have Excel, you won't be doing much financial modeling.

Some Suggestions

I've used Excel for many years.  I have some tricks to make my models easier to build and easier to read.

First, I set up my toolbar on the top of Excel to have some extra buttons that aren't there when Excel is installed.

Go to TOOLS-CUSTOMIZE and you can drag and drop new buttons to your menu bar.  There are hundreds of extra buttons available and you can even write macros to create your own buttons (which I've only had to do a couple of times so don't sweat it).  Below is what my typical Excel workspace looks like.  You may want other buttons.

I try not to use macros in my spreadsheets.  Why? Because too often other people don't understand them (like you).

I use the formatting buttons to put commas in my numbers, but I avoid using the dollar sign formatting button because dollar signs are visually difficult to read in a financial model.  It's a stylistic thing and you can do whatever floats your boat.

OK, another big tip:

  1. Plastics.
  2. Open Excel.
  3. Open  a blank worksheet
  4. Go to any cell
  5. Type "=a4" but DON'T PRESS ENTER.
  6. Press the left arrow once or move the cursor so this it is positioned in between the "a" and the "4" in "a4".
  7. Using your left hand, press F4 on your keyboard.
  8. The "a4" should have become "$a$4".

Cool as nuts, huh?  F4 is the secret weapon in making cell references absolute or relative.  Now if you click on that cell and drag/copy it a few columns, all the references will stay as "$a$4" instead of becoming "b4", "c4", "d4" etc.

Click on F4 a few more times and cell reference will scroll through "a4", "$a$4", "$a4", and "a$4".

 
 

Copyright and other other rights reserved by Steven Saltman. 2002 and all future years until the end of time. Yes, I answer mail sent to me via LandAndFarm.com