Hey LinkedIn connections!
I am delighted to inform you that, with help of
The Valuation School
, I have been exploring basic financial modeling. This article is documentation of what I learnt about the same and some insights that may help you use Excel better. A lot of these are conventions that are used and they are conventions for a good reasons.
- Screener is amazing for purpose of importing data about listed companies. It also allows me to just make a sheet and auto-populate it with other company's data given that I don't touch the original data sheet. Cash flow data is available for past 10 years and rest of statements are available for past 7 years.
- It's a really good habit to set column width to 1.15 for A column and putting in hashtags before every 'block'. For instance, Adding '#' in A column in front of Income statement and balance sheet, using CTRL + either down/up arrow. It makes your sheet and model relatively easier to navigate.
- Calibri font is the most professional font.
- Hardcodes are when you write a number, when you reference a cell, it's a Soft-code. Hardcodes are to be done in lighter navy blue and soft codes are done in black color.
- The hardcoding should be kept to a minimum. The cell references make the model very dynamic. Helps troubleshooting being easier.
- Using IFERROR function is a massive help to avoid any errors in your model. Presence of an error is the worst possible thing in your financial model. For instance, =IFERROR(C4/C3-1,0) and if you drag and 3rd row features any 0(rendering the formula indivisible as x/0), it won't show #DIV error but 0.
- Paste Special is a lifesaver as you can use format painter without activating the same(and more!) . An example would be, copy A2, and Paste special while using the format selection to do the same.
- Using CRTL +1, You can accelerate process of formatting a lot faster. Using combination of F4 and shortcut greatly increases the speed of your workflow.
Mentioned are some of the tips and tricks will speed up your workflow or just make it more intuitive. Try it out, It will help. Thanks for reading!