Objectives in financial modeling - Microsoft Excel教程

- [Instructor] Financial modeling is a skillset that's useful in virtually every industry. So I want to start by talking about the objectives in financial modeling and what you need to know as you begin your journey. So to begin with, when we think about financial models, we're talking about models in Excel. And the reality is that any model, whether an Excel or anywhere else, is just a simplified representation of the real world. In fact, my favorite example of a model is a map. The map is a simplified representation of what we see out there every day. There's certain details that we don't need on most maps, for instance, trees, cars, people, and there are other details that we do need on the map, roads, perhaps buildings, mountains, things like that. So the idea with a model is just like with a map, put the things that you need into it and leave out the extraneous detail. When it comes to Excel models, we're trying to capture a real-world process through an Excel spreadsheet. The Excel spreadsheet is an easy tool to try to capture these real world processes because it makes formulas very simple to input. And so we can go through and model kind of what happens to a particular variable or process over time. For instance, sales, profitability, production costs, these are all things we could easily model in Excel, but there's almost an infinite number of different business variables we could try to put into an Excel model. Keep in mind that basic concept though. Keep out the extraneous details, put in the stuff that you need. And this is particularly true in finance. So it's crucial that if you're going to work in the field, that you be able to take an Excel model and build it quickly and efficiently to capture what you are trying to understand. Excel models usually rely on a key set of assumptions that we make upfront when we're building that model. So for instance, if we're thinking about forecasting a company's sales over time or building out a budget model, we probably make assumptions about what marketing spend might be, or at a more basic level, what the overall economy might look like. So for instance, we might make an assumption about the growth rate in the overall market, and then we use that assumption to try to capture what we think is going to happen to our specific firm. So Excel models, we have kind of three different objectives I like to think about as we're building them. Objective number one is to accurately represent the key aspects in the real world without getting bogged down in the details. Objective number two is to go through and make our model so that when others use it, they can read it, understand it, and evaluate it. It's very rare that we build an Excel model that nobody else will ever see. So if you are not the person that built the Excel model, do you think you can understand it easily? Oftentimes the answer is no. We need to try to build an Excel model, not just with ourselves in mind, but with other users down the road in mind. And then our third objective is to build the model so that it's dynamic, so that we can easily change those underlying assumptions. We assume 3% GDP growth in the overall economy, and we use that to calibrate our sales. Well, what happens if we change our mind later and think it might be 4% or 2%? We want to be able to go through and make those adjustments on the fly. Building a dynamic Excel model makes your tool much more useful and effective in a variety of different contexts and circumstances. At this point, you should have a basic idea on kind of what an Excel model is and what it's capturing. Start thinking about the kinds of models you might build for your business.