Financial Modelling in Practice: A Concise Guide forIntermediate and Advanced Level is a practical, comprehensiveand in-depth guide to financial modelling designed to cover themodelling issues that are relevant to facilitate the constructionof robust and readily understandable models.
Based on the authors extensive experience of building models inbusiness and finance, and of training others how to do so this bookstarts with a review of Excel functions that are generally mostrelevant for building intermediate and advanced level models (suchas Lookup functions, database and statistical functions and soon). It then discusses the principles involved in designing,structuring and building relevant, accurate and readilyunderstandable models (including the use of sensitivity analysistechniques) before covering key application areas, such as themodelling of financial statements, of cash flow valuation, riskanalysis, options and real options. Finally, the topic of financialmodelling using VBA is treated. Practical examples are usedthroughout and model examples are included in the attachedCD-ROM.
Aimed at intermediate and advanced level modellers in Excel whowish to extend and consolidate their knowledge, this book isfocused, practical, and application-driven, facilitating knowledgeto build or audit a much wider range of financial models.
Note: CD-ROM/DVD and other supplementary materials arenot included as part of eBook file.
About the Author
Michael Rees gained a BA with First Class Honours and aDoctorate in Mathematics from Oxford University in 1985 and 1988respectively. In 1992 he gained an MBA with Distinction fromINSEAD, and in 2003 graduated in first position on the Certificatein Quantitative Finance program, also winning the Wilmottaward.Since 2002 Michael has worked independently as a consultant andtrainer in financial modelling. Prior to this he worked as astrategy consultant with Braxton Associates and Mercer ManagementConsulting, and also as an analyst at J.P. Morgan.Michael lives in Richmond, UK. He was born in Canada, has lived inseveral countries, and is fluent in French and German.
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.
Most Helpful Customer Reviews
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.