Financial Modelling in Practice: A Concise Guide for Intermediate and Advanced Level / Edition 1

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Financial Modelling in Practice: A Concise Guide for Intermediate and Advanced Level is a practical, comprehensive and in-depth guide to financial modelling designed to cover the modelling issues that are relevant to facilitate the construction of robust and readily understandable models.

Based on the authors extensive experience of building models in business and finance, and of training others how to do so this book starts with a review of Excel functions that are generally most relevant for building intermediate and advanced level models (such as Lookup functions, database and statistical functions and so on).  It then discusses the principles involved in designing, structuring and building relevant, accurate and readily understandable models (including the use of sensitivity analysis techniques) before covering key application areas, such as the modelling of financial statements, of cash flow valuation, risk analysis, options and real options. Finally, the topic of financial modelling using VBA is treated. Practical examples are used throughout and model examples are included in the attached CD-ROM.

Aimed at intermediate and advanced level modellers in Excel who wish to extend and consolidate their knowledge, this book is focused, practical, and application-driven, facilitating knowledge to build or audit a much wider range of financial models.

Note: CD-ROM/DVD and other supplementary materials are not included as part of eBook file.

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Product Details

  • ISBN-13: 9780470997444
  • Publisher: Wiley
  • Publication date: 12/9/2008
  • Series: Wiley Finance Series , #443
  • Edition description: New Edition
  • Edition number: 1
  • Pages: 288
  • Sales rank: 845,807
  • Product dimensions: 6.80 (w) x 9.80 (h) x 0.90 (d)

Meet the Author

Michael Rees gained a BA with First Class Honours and a Doctorate in Mathematics from Oxford University in 1985 and 1988 respectively. In 1992 he gained an MBA with Distinction from INSEAD, and in 2003 graduated in first position on the Certificate in Quantitative Finance program, also winning the Wilmott award.
Since 2002 Michael has worked independently as a consultant and trainer in financial modelling. Prior to this he worked as a strategy consultant with Braxton Associates and Mercer Management Consulting, and also as an analyst at J.P. Morgan.
Michael lives in Richmond, UK. He was born in Canada, has lived in several countries, and is fluent in French and German.

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Table of Contents

Background, Objectives and Approach.

About the Author.


1 Building Blocks: Selected Excel Functions and Tools.

2 Principles of Modelling.

3 Financial Statement, Cash Flow and Valuation Modelling.

4 Risk Modelling.

5 Introduction to Options and Real Options Modelling.

6 VBA for Financial Modelling.

Further Reading.


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Customer Reviews

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Sort by: Showing 1 Customer Reviews
  • Posted September 7, 2009

    more from this reviewer

    How to Rev Up Your Financial Modeling Skills Set

    Michael Rees succeeds to a large extent in his endeavor of writing a text that addresses the financial modeling process instead of Excel functionality, financial theory, or mathematical models. To his credit, Rees has put together a large number of useful modeling examples in the CD-ROM that is sold with the text. Rees' book assumes that readers have at least an intermediate knowledge of both statistical and financial concepts.

    After reviewing select Excel functions and tools relevant to financial modeling, Rees gives his audience of modelers many practical tips about how to design, structure, and build models that are relevant, accurate, and easily understandable. Whoever has experience with models will probably agree with Rees when he writes that the majority of models built are in practice of mediocre quality. Someone other than the author of the model will often experience several challenges in dealing with the model at hand, i.e., too much time spent on understanding the model, complexity of the auditing and validating processes, hard to share with others, over-reliance on the original modeler to maintain or use it, lack of clarity of objectives, and presence of errors and implicit assumptions.

    Rees then goes into the modeling of financial statements that is often required in the world of corporate finance for forecasting profit and cash, assessing financing requirements, analyzing credit risk and valuation, etc. This chapter is a little gem. It contains many practical tips. Once again, readers will be reminded that there is not always 100% agreement on the definition of some financial concepts.

    Rees then uses Palisade Corporation's add-ins @RISK and PrecisionTree for many modeling examples in the two chapters that he dedicates to risk modeling and real option modeling, respectively. Having some understanding of both statistical and financial concepts is particularly important here to benefit from reading both chapters. Probably, many readers with an advanced knowledge of Excel 2007 will regret that the above-mentioned functionality that Palisade Corporation offers has not yet been systematically integrated into at least Microsoft Office Professional.

    Finally, Rees discusses the use of Visual Basic for Applications (VBA) in a range of practical financial modeling situations. Rees points out that many otherwise competent modelers never learn VBA. For this reason, Rees makes the assumption that his audience is not very familiar with VBA. Rees shows how macros, i.e., subroutines and user-defined functions, can be used in a variety of modeling contexts.

    In conclusion, Rees has made a valuable contribution to the field of financial modeling. The CD-ROM that is sold with the text plays a key role in achieving this objective.

    1 out of 1 people found this review helpful.

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