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Über dieses Buch

This book provides a comprehensive introduction to modern financial modeling using Excel, VBA, standards of financial modeling and model review. It offers guidance on essential modeling concepts around the four core financial activities in the modern financial industry today: financial management; corporate finance; portfolio management and financial derivatives. Written in a highly practical, market focused manner, it gives step-by-step guidance on modeling practical problems in a structured manner. Quick and interactive learning is assured due to the structure as a training course which includes applied examples that are easy to follow. All applied examples contained in the book can be reproduced step by step with the help of the Excel files. The content of this book serves as the foundation for the training course Certified Financial Modeler.

In an industry that is becoming increasingly complex, financial modeling is a key skill for practitioners across all key sectors of finance and banking, where complicated problems often need to be solved quickly and clearly. This book will equip readers with the basic modeling skills required across the industry today.

Inhaltsverzeichnis

Frontmatter

1. Introduction

Abstract
Financial modeling can best be structured around ten questions. These questions are answered in the two workshops on Excel and VBA as well as in the chapters on Financial Modeling Standards, Model Review, Investment and Financing, Corporate Finance, Portfolio Management and Derivatives – these are the prerequisites for successfully completing the degree of Certified Financial Modeler.
Joachim Häcker, Dietmar Ernst

2. Financial Modeling Standards

Abstract
In the chapter “Financial Modeling Standards” 5 process steps and 20 milestones of financial modeling are presented and 150 recommendations for action are listed. The aim is to provide the financial modeler with standards for constructing his model. Why does a financial modeler need such standards?
Joachim Häcker, Dietmar Ernst

3. Model Review

Abstract
The financial modeler has developed a financial model and now faces the challenge of assessing its quality in the context of the model review. The necessity to conduct a model review follows primarily from quality management. The financial modeler needs to assure that the financial model which he developed is free of errors, user friendly and works reliably. In the case of models that are built for third parties, there is an additional liability risk, which can be reduced through a careful model review.
Joachim Häcker, Dietmar Ernst

4. Workshop Excel Part I

Abstract
In this chapter, the financial modeler acquires the skills needed to develop Excel software solutions. In the Workshop Excel Part I, the financial modeler is introduced to the structure of a financial model. Initially, the task list is defined, the key tasks are identified and visualized with the help of a diagram. An optimal visual display helps in structuring and documenting the financial model. The financial modeler learns how to create menus, buttons and borders and to highlight important elements using color. Professional financial modelers utilize key combinations when developing financial models. For that reason, the topics of key combinations with “Ctrl,” function keys and also commands via the ribbon are addressed.
Joachim Häcker, Dietmar Ernst

5. Workshop Excel Part II

Abstract
In this chapter, the financial modeler acquires the skills needed to develop Excel software solutions.
In the Work Shop Excel Part II, the financial modeler learns to develop a prototype in Excel, to provide management with the appropriate signals, to correctly assemble the data set, to provide a sensitivity analysis of the results, to calculate scenarios and to check the financial model for errors. In addition to these important milestones, the financial modeler is familiarized with the use of important applications. He learns how to activate and use so-called add-ins, how to import data via VLookup and Index/Match and how to generally import data from the internet into Excel and work with that data in Excel.
Joachim Häcker, Dietmar Ernst

6. Workshop Excel Part III

Abstract
In this chapter, the financial modeler acquires the skills needed to develop Excel software solutions. In the Workshop Excel Part III, the financial modeler studies how best to present the results and recommendations of the financial model to management or clients using Excel. This step is of major importance, since the financial modeler is not just a number cruncher who leaves the presentation to colleagues who are closer to the market. Instead the professional financial modeler can utilize Excel in a way that clearly distinguishes him from the “Powerpoint competition.” In contrast to Powerpoint, diagrams can be of a dynamic nature in order to show the implications of changing constraints via time series comparisons, ranking order comparisons, structural comparisons, frequency comparisons and comparisons of correlations.
Joachim Häcker, Dietmar Ernst

7. VBA Workshop

Abstract
In this chapter the financial modeler will study the development of Excel software solutions. He will understand how these can be created with the macro recorder or directly via programming with VBA in the development environment. Almost all Excel operations can be automated. The financial modeler writes commands that are executed by Excel. The use of VBA offers a number of advantages to the financial modeler
Joachim Häcker, Dietmar Ernst

8. Investment Appraisal

Abstract
Pharma Group wants to determine the most suitable investment appraisal methods. Both static and dynamic methods are taken into consideration.
Joachim Häcker, Dietmar Ernst

9. Financing

Abstract
Pharma Group intends to invest in lucrative projects, but does not possess a sufficient amount of liquid funds. Thus Pharma Group must seek additional funding.
Joachim Häcker, Dietmar Ernst

10. Corporate Finance Part I

Abstract
In this section the financial modeler will learn how to derive a valuation range for a company – here Pharma Group. The summary and presentation of the results of the various valuation methods relies on the so-called football field graph.
Joachim Häcker, Dietmar Ernst

11. Corporate Finance Part II

Abstract
In this section the financial modeler will learn how to derive a valuation range for a company – here Pharma Group. The summary and presentation of the results of the various valuation methods rely on the so-called football field graph.
Joachim Häcker, Dietmar Ernst

12. Portfolio Management Part I

Abstract
In this chapter, the financial modeler is given the task to invest a portion of the excess liquidity of Pharma Group and to utilize the techniques of modern portfolio management. The key variables in his portfolio management decisions are the return of the assets and the structure of the corresponding risks. The financial modeler is aware of the fact that the return and risk of individual assets is determined in the financial markets, but that portfolio management, via the concrete combination of the assets, determines the return and risk attributes of the individual portfolio.
Joachim Häcker, Dietmar Ernst

13. Portfolio Management

Abstract
In this chapter, the financial modeler is given the task to invest a portion of the excess liquidity of Pharma Group and to utilize the techniques of modern portfolio management. The key variables in his portfolio management decisions are the return of the assets and the structure of the corresponding risks.
Joachim Häcker, Dietmar Ernst

14. Derivatives

Abstract
Following financial management, a corporate valuation of Pharma Group and the medium-term investment of liquid funds in equities and bonds, Pharma Group is now interested to invest a small portion of its liquid assets in derivatives. Pharma Group wants to internally assess the market prices of plain vanilla options and therefore conducts a valuation.
Joachim Häcker, Dietmar Ernst

Backmatter

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