Skip to Main Content
Corporate and Project Finance Modeling
book

Corporate and Project Finance Modeling

by Edward Bodmer
November 2014
Intermediate to advanced content levelIntermediate to advanced
624 pages
17h 11m
English
Wiley
Content preview from Corporate and Project Finance Modeling

Chapter 5Avoiding Bad Programming Practices and Creating Effective Auditing Processes

For purposes of valuation and investment analysis, financial models do not have to be overly complex with 30 different sheets and tedious detail for items that are relatively insignificant. The reaction of most people to receiving an immense model with a lot of sheets and excruciating detail of operating expenses is to put the model in a folder and not to perform risk analysis. Even if valuation models are relatively simple, creating a model that is flexible enough to handle different risks, that accurately measures profit and cash flow, that presents the key value drivers together with important outputs in an easily understandable and transparent manner, and that does not crash Microsoft Excel because of circular references often requires a disciplined approach to programming. A well-structured transparent model can avoid the ghastly feeling—after completing a model—of being asked by your boss to open and revise a model that you have not looked at for a couple of weeks. This horrible feeling often comes from knowing that you will have to review a long and complex formula with multiple nested IF statements that have become all but impossible to interpret.

To address issues of transferring models among staff, some companies mandate the use of a set of best practices for analysts who program models. While these practices may help in making models transparent and effective for summarizing valuation, ...

Become an O’Reilly member and get unlimited access to this title plus top books and audiobooks from O’Reilly and nearly 200 top publishers, thousands of courses curated by job role, 150+ live events each month,
and much more.
Start your free trial

You might also like

Project Finance

Project Finance

Paul D. Clifford
Corporate Finance, 4th Edition

Corporate Finance, 4th Edition

Pierre Vernimmen, Pascal Quiry, Maurizio Dallocchio, Yann Le Fur, Antonio Salvi

Publisher Resources

ISBN: 9781118854365Purchase book