Excel Tips

Financial Modeling in Excel
EduPristine Financial Modeling
EduPristine www.edupristine.com
Agenda
Introduction and Context
Efficiently using excel preparation for modeling
Excel Summarization Using Pivot Tables
Creating a template for integrated model
Key Authorization
CFA Institute (2010-11)

Authorized Training provider CFA
Pristine is now the authorized training
provider for CFA Exam trainings . Pristine is
largest training provider for CFA in India
with presence across seven major cities.
FPSB India (2010-11)

Authorized Training provider -CFP
An authorized Education Provider for
Chartered Financial Planner Charter.
GARP (2007-11)
Authorized Training provider -FRM
Largest player in India in the area of risk
management training. Trained 1000+
students in risk management
PRMIA (2009-11)
Authorized Training provider PRM/
APRM
Sole authorized training for PRM Training
in India. Largest player in India in the area
of risk management training. Trained
1000+ students in risk management
Key Associations1
Ernst & Young (2010)

Real Estate Modeling
Senior Associates were trained on
building valuation models for real
estate
Bank Of America
Continuum Solutions (2010)
Finance for Finance
Associates were trained on valuation
and mergers and acquisitions
J. P. Morgan (2010)
The Real Assets Group were
trained in Excel for infrastructure
and real-estate modeling
Mizuho (2010)
Bankers were using excel models
that they could not understand.
Conducted financial modeling in
Excel trainings to bridge the gap
ING Vyasa (2010)

Infrastructure & Project Finance
Bankers were trained on making
integrated models for project
finance and infrastructure.
Franklin Templeton
CFA (2010)
Students were facing a gap in the
overall understanding of finance
topics like corporate finance, FSA and
valuation. Provided training for over
100 hours to bridge the gap
Credit-Suisse India (2009)

Risk Management and Quant.
Analysis
IT Professionals of Credit-Suisse
India were trained on risk
management.
HSBC (2008)
Risk Management and Quant.
Analysis
New joinees in HSBC had a gap in
knowledge of Risk Management
and quantitative skills. Conducted
trainings (On campus) to bridge the
gap
1. Indicative List
Key Associations
NUS Business School (2011)

Second year MBA students were
given a full 2-day workshop on
creating financial models. They
learnt how to create integrated
models of valuation.
IIM Calcutta (2010-11)

Students about to go for internships
and join jobs found a gap in their
grasp of knowledge of excel for
financial modeling. Conducted
training for 75+ students with an
average rating of 4.5+
FMS Delhi (2010-11)

Final Year MBA students of Faculty
of Management Studies, Delhi
University were trained in financial
modeling so as to prepare them
better for a job in finance.
NISM (2008-11)
Derivatives in Hedging (2008)
Financial Modeling (2011)
Corporate in Ludhiana incurred huge
losses because of derivative trades
(for hedging). Conducted trainings for
directors and CFOs for better
understanding of derivative products
IIT Delhi (2009)

Corporate finance
Students get placed in finance
companies (UBS, GS, MS, etc)
with no understanding of the
subject/ Job Profile. Conducted
workshop to bridge the gap
BITS Pilani (2009)

Workshops on Basics of Finance
Most of the students desire a
career in finance. Conducted
training for 350+ students with
an average rating of 4.5+
IEMR Delhi (2010-11)
SIMSREE (2010)

Final Year MBA students of IEMR
went through extensive financial
modeling workshop to acquire
skills of financial modeling.
Final Year MBA students of

Sydenham MBA, Mumbai were
trained in financial modeling so as to
prepare them better for a job in
finance.
Excel as the most important tool for modeling

Excel is one of the most widely used tools in financial industry
Easy to use
High reach & access to software across geographies

Flexibility
Robustness
Inbuilt features (Most people would not even be using 95% of the features) & Extendibility
Modular and Object Oriented Architecture
Excel as a data-store
Easy to store and retrieve information
Flexibility to put many data-types in the same sheet
Functions and a range of features
Excel is easily extendible to be used as a Modeling tool
Modeling Context
Understand the industry models being used
Create your own models Rather than just using them
Improve & enhance productivity in work
Extend these models for your use
Debug Problems
Agenda
Key aspects of Modeling & Excel Usage

Building a ROBUST model is a must for other people to use your model
It should generate the correct results
It should have proper area for Inputs/ Outputs
It should be able to handle errors properly
Naming/ Labeling of data items should be done properly
Accidental changing of model parameters should be avoided
The model should be easy to understand on computer and in printout
Reusable components can be made in the excel sheet, which can be made later
SPEED is the key in modeling

A large model might have multiple excel sheets and a lot of formulas and calculations. It is necessary to navigate through the
excel sheet in a speedy manner and understand it
It is a fact that mouse is 5 times slower than using the keyboard to use excel. Due to heavy involvement of the users, having a
strong command over the keyboard shortcuts is a must!
A well designed excel sheet is easy to understand as well
Lets take a moment to understand components of Excel

Toolbar
Formula Bar
Cells
Worksheet
Name
Excel 2007 Interface
Excel 2003 and 2007 are being widely used in the industry. Most of features of 2007 are backward compatible
Lets take a moment to understand components of excel
Excel 2007 Interface

Excel 2003 and 2007 are being widely used in the industry. Most of features of 2007 are backward compatible
CTRL + S
CTRL + C
CTRL + V
CTRL + X
CTRL + Z
CTRL + A
CTRL + B
ALT + TAB
ALT + F4
CTRL + TAB
CTRL + ALT + V
CTRL + 9
SHIFT + CTRL + 9
CTRL + 0
SHIFT + CTRL + 0
ALT + H + O + I
SHIFT + F11
SHIFT + Spacebar
CTRL + Spacebar
SHIFT + ALT +
SHIFT + ALT
CTRL + Minus sign
F2
Basic Editing and Saving Excel

Save Workbook
Copy
Paste
Cut
Undo
Select All
Bold
Switch Program
Close Program
Switch workbooks
Some Special Shortcuts
Paste Special
Hide Row
Unhide Row
Hide Column
Unhide Column
Fit column width
New worksheet
Highlight row
Highlight column
Group rows/columns
Ungroup rows/columns
Delete selected cells
Edit cells
CTRL + 1
ALT + H + 0
ALT + H + 9
SHIFT + CTRL + ~
SHIFT + CTRL + !
SHIFT + CTRL + #
SHIFT + CTRL + $
SHIFT + CTRL + %
CTRL + ;
= (equals sign)
ALT + =
CTRL +
CTRL + ~
F9
SHIFT + CTRL + Enter
ALT + M + P
ALT + M + D
ALT + M + A + A
CTRL + [
CTRL + ]
F5 + Enter
SHIFT + CTRL + {
SHIFT + CTRL + }
Navigating / Editing
Arrow keys
CTRL + Pg Up/Down
CTRL + Arrow keys
SHIFT + Arrow keys
SHIFT + CTRL + Arrow
Home
CTRL + Home
SHIFT + ENTER
TAB
SHIFT + TAB
ALT +
Move to new cells

Switch worksheets
Go to end of continuous range Select a cell
Select range
Select continuous range
Move to beginning of line
Move to cell A1
Move to cell above
Move to cell to the right
Move to cell to the left
Display a drop-down list
Formatting
Format Box
Increase decimal
Decrease decimal
General format
Number format
Date format
Currency format
Percentage format
Enter the date
Formulas
Start a formula
Insert AutoSum formula
Copy formula from above cell
Show formulas/values
Recalculate all workbooks
Enter array formula
Auditing Formulas
Trace immediate precedents
Trace immediate dependents
Remove tracing arrows
Go to precedent cells
Go to dependent cells
Go back to original cell
Trace all precedents (indirect)
Trace all dependents (indirect)
Inside the cell Editing
ALT + ENTER
SHIFT + Arrow
SHIFT + CTRL + Arrow
F4
ESC
Start new line in same cell

Highlight within cells
Highlight contiguous items
Toggle $
Cancel a cell entry
Change all Inputs to Blue:

Press F5 then Select "Special" then "Constants", "OK then Manually change
selection to blue font color
Change all Formulas to Black: Select "Formulas" instead of "Constants then
change selection to black color
Moving across toolbars in Excel 2003 and 2007

Press Alt Key to activate Main toolbar
For Example, Alt F for file
Use CTRL + TAB to Go to next

toolbar
Use Arrow key to navigate

further
In 2007, Pressing the ALT key automatically shows the options
11
Cell Referencing - $
Use $ for Absolute Reference
A1 vs $A1 vs A$1 vs $A$1
What happens when you copy paste cells
Source
Destination
$A$1
$A$1
A$1
C$1
$A1
$A3
A1
C3
Change the referencing of a cell by F2 + F4
Refer Worksheet A
12
Simple Exercises in Excel

The financials of a start-up company are given to you. The company would be eligible for funding if their
operating profit margin is greater than 35% and CAGR in revenue growth is greater than 50%. Create a model
to check if the company is eligible for funding. Also visually indicate the eligibility.
Use worksheet B
Hint
Use (P(t)/ P(t-k))^(1/k) -1 to calculate CAGR

Use AND function to calculate eligibility
Use IF function to print it
Use conditional formatting to output the results
Email ids of 100 people are given to you. They all need to be migrated to a new domain of edupristine.com.
Write a function to migrate all email ids to new domain
Use worksheet C
Hint
Use FIND to find the common character
Use LEFT function
Use CONCATENATE function
13
Arrays in Excel
Array (Can be loosely thought of as a list) is a
group of cells or values that Excel treats as a unit
No longer treats the cells individually, but list

of cells as an individual entity
Since individual cells are not independent
entities, so they cannot be changed
individually
Enables apply a formula to every cell in the
range using just a single operation
For any matrix Operation
Calculate the exact size of the transposed
Matrix
Select the appropriate range
Use the function
Press SHIFT + CTRL + ENTER
Use Worksheet D
To Run Array Functions Remember to use CTRL + SHIFT + ENTER

14
Frequently Used Array functions

Function Name
Function
SUMPRODUCT()
To Sum product 2 matrices
TRANSPOSE()
To transpose a matrix
MATCH()
Match and Index are used in conjunction as a lookup function
INDEX()
Match and Index are used in conjunction as a lookup function
VLOOKUP()
To lookup for a particular value in array, with the starting column acting as a
lookup reference
COLUMN()
Returns the column number of the cell referenced
ROW()
Returns the row number of the cell referenced
HLOOKUP()
To lookup for a particular value in array, with the top row acting as lookup
reference
15
Using the VLookUp Function

VLOOKUP() function
The V in VLOOKUP() stands for vertical
Works by looking in the first column of a table for the

value you specify
It then looks across the appropriate number of columns
(which you specify) and returns whatever value it finds
there
The final option (range_lookup) is a Boolean value that
determines how Excel finds the value. Always use FALSEfor exact match
Whenever looking for data picked from the net, trim the
strings before comparison
Question (Use WorkSheet E)
The ID of defaulters and their amount and phone number
has been provided by the Credit Bureau in Columns A to D.
Column F contains the IDs of your clients. Use Vlookup
function to find out the default amount of your clients.
One of the most widely used functions in Excel

16
Using the HLookup Function

HLOOKUP() function is
H in HLOOKUP() stands for horizontal
Similar to VLOOKUP()
It searches for the lookup value in the first
row of a table
Question: Use Worksheet F
Various expenses of Pristine are given in a table.

Write a function to calculate the total expenses
for any desired month (user should be able to
change this value, and automatically the
expenses should be updated)
Both Vlookup and Hlookup have a limitation of using the first Column/ Row as reference
17
Index & Match Functions

INDEX() returns the reference or the value of a
cell at the intersection of a row and column inside
a reference
MATCH() function
looks through a row or column of cells for a

value
If it finds a match, it returns the relative
position of the match in the row or column
Use the usual wildcard characters within the
lookup_value argument (provided that
match_type is 0 and lookup_value is text)
Use the question mark (?) for single characters
and the asterisk (*) for multiple characters
See Worksheet G
18
Use Index and Match Any Column & row Lookup

Index and Match can be used in conjunction to perform complex lookup functions
Use Match to generate the row number that you are interested in
Use Index to generate the value that you are looking for
Similar to implementation of a new kind of directory service
Always Use FALSE in the

Boolean required for
comparison
Use Worksheet H
Various expenses of Pristine are given in a table. Write a function to calculate the desired expense head for
any desired month (user should be able to change both the values, and automatically the expenses
should be updated)
Easily Extendible approach to get any generalized kind of search

(where both row and column can be variable)
19
Agenda
20
Pivot Tables An introduction
Easy Summarization & Analysis Tool

21
Pivot Tables
Summarize data in one field
called a data field
and break it down according to the data in
another field.
The unique values in the second field (called
the row field) become the row headings
Further break down your data by specifying a

third field
called the column field
22
Terms used in Excel

Data source: The original data
Range, a table, imported data, or an external data
source.
Field: A category of data, such as Region, Quarter, or
Sales
Most PivotTables are derived from tables or
databases, a PivotTable field is directly analogous
to a table or database field
Row field: A field with a limited set of distinct text,
numeric, or date values to use as row labels in the
PivotTable
Column field: A field with a limited set of distinct text,
numeric, or date values to use as column labels for
the PivotTable
Report filter: A field with a limited set of distinct text,
numeric, or date values that you use to filter the
PivotTable view
PivotTable items: The items from the source list used
as row, column, and page labels
23
Summarize Large Data

To start the pivot wizard:
ALT D + P
To complete the process, press finish
Use Example I
Calculate Region Wise, Year wise sales
Give Product wise Data for 2008 Only
24
Summarize Large Data
To start the pivot wizard:

ALT D + P
To complete the process, press finish
Use Example I
25
Filtering for Particular Rows/ Columns
Use Example I
Get Data only for Delhi
26
Other Customization Options

Selecting the entire PivotTable: Choose Options, Select, Entire PivotTable
Selecting PivotTable items: Select the entire PivotTable, then choose Options, Select. In the list,
click the PivotTable element you want to select: Labels and Values, Values, or Labels
Formatting the PivotTable: Choose the Design tab and then click a style in the PivotTable Styles
gallery
Sorting the PivotTable: Click any label in either the row field or the column field, choose the
Options tab, and then click either Sort A to Z or Sort Z to A. (If the field contains dates, click Sort
Oldest to Newest or Sort Newest to Oldest, instead.)
Refreshing PivotTable data: Choose Options and then click the top half of the Refresh button
Filtering the PivotTable: Click-and-drag a field to the Report Filter area, drop down the report
filter list, and then click an item in the list
27
Give the average sales in regions

Use Example I
Instead of Total, give the average sales
28
Changing the Pivot Table

Click any cell in the PivotTables data area
Choose Formulas, Calculated Field
Excel displays the Insert Calculated Field
dialog box
Use the Name text box to enter a name
for the calculated item
Use the Formula text box to enter the

formula you want to use for the
calculated item
Use Example I

Instead of Total, give the average sales
Calculate the forecast for sales in 2009
29
Errors in Functions
Error
Meaning
# DIV/ 0!
Divide by Zero Error

Generally seen when trying to divide by empty cell
# NAME?
Function name not found error

Generally seen in misspelling of function
# N/A
Data Not available

Quite often seen Vlookup cannot find data
# REF!
Invalid Cell reference

Typically when a cell is referenced, which has been deleted
# VALUE!
Argument/ Operand of the wrong type
# NUM!
Problem in value
Typically when a +ve number is expected, and ve number is given as
argument
Important to understand what kind of error can occur and handle it properly
30
Use ISERROR() to Handle Errors

Excel 2003 has ISERROR() to determine, if there are any exceptions in the formulas
Handle exception and exit the error gracefully
Excel 2007 also has an IFERROR() function to handle errors
Use Worksheet E to handle the errors and display Not Defaulted
31
Agenda
32
Creating the template for financial modeling

Matrix Integrity across sheets and tower model for within the sheet
Tower Model within sheet
Reduce the size of the first 1-2 columns to
create the headings
Ctrl + arrow keys to move faster from 1 section
to another
Larger column width to put in the names

and text information
Matrix integrity to be maintained across
multiple sheets
Eases copy paste and faster dragging of
formulas
Reduces chances of errors in writing the
formulas linked across sheets
33
Freeze panes at the right spots to ease navigation in the model
The years (indicating Actual and Projected) are put in one of the top row
Rows and columns are frozen at the intersection of the left hand information column and the
years row at the top
Hint: Shortcut Alt + w + f
34
Thank you!
Contact:
EduPristine
702, Raaj Chambers, Old Nagardas Road, Andheri (E), Mumbai-400 069. INDIA
www.edupristine.com
Ph. +91 22 3215 6191
EduPristine www.edupristine.com

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Financial Modeling in Excel

EduPristine Financial Modeling

EduPristine Financial Modeling

CFA Institute (2010-11)

FPSB India (2010-11)

EduPristine Financial Modeling

Ernst & Young (2010)

ING Vyasa (2010)

Credit-Suisse India (2009)

NUS Business School (2011)

IIM Calcutta (2010-11)

FMS Delhi (2010-11)

IIT Delhi (2009)

BITS Pilani (2009)

IEMR Delhi (2010-11)

Financial Modeling in Excel

Final Year MBA students of

EduPristine Financial Modeling

Excel as the most important tool for modeling

High reach & access to software across geographies

EduPristine Financial Modeling

Key aspects of Modeling & Excel Usage

SPEED is the key in modeling

EduPristine Financial Modeling

Lets take a moment to understand components of Excel

Excel 2007 Interface

EduPristine Financial Modeling

Lets take a moment to understand components of excel

Excel 2007 Interface

EduPristine Financial Modeling

Basic Editing and Saving Excel

Move to new cells

EduPristine Financial Modeling

Start new line in same cell

Change all Inputs to Blue:

Moving across toolbars in Excel 2003 and 2007

Use CTRL + TAB to Go to next

Use Arrow key to navigate

In 2007, Pressing the ALT key automatically shows the options

EduPristine Financial Modeling

Change the referencing of a cell by F2 + F4

EduPristine Financial Modeling

Simple Exercises in Excel

Use (P(t)/ P(t-k))^(1/k) -1 to calculate CAGR

EduPristine Financial Modeling

No longer treats the cells individually, but list

To Run Array Functions Remember to use CTRL + SHIFT + ENTER

Frequently Used Array functions

To Sum product 2 matrices

Match and Index are used in conjunction as a lookup function

Match and Index are used in conjunction as a lookup function

Returns the column number of the cell referenced

Returns the row number of the cell referenced

EduPristine Financial Modeling

Using the VLookUp Function

Works by looking in the first column of a table for the

One of the most widely used functions in Excel

Using the HLookup Function

Various expenses of Pristine are given in a table.

Index & Match Functions

looks through a row or column of cells for a

EduPristine Financial Modeling

Use Index and Match Any Column & row Lookup

Always Use FALSE in the