Financial Modeling in Excel For Dummies

Chapter 5

Using Someone Else’s Financial Model

IN THIS CHAPTER

Building your own model versus using a template

Working with inherited models

Using Excel’s audit tools

Checking your model’s accuracy

As a consultant, my favorite scenario is when a client comes to me and asks me to build a new model from scratch. This situation does happen every now and then, but it’s very rare. Normally, clients have a financial model that isn’t working properly, or they need to update their model from last year, or they need to change the layout or design of their model. Being able to create my own models from scratch every time would be nice, but it’s rarely practical. Instead, most of the time, like most modelers, I’m working with inherited models — models I’ve had to take over from someone else.

When you inherit a model, not only do you inherit the inputs, assumptions, and calculations the original modeler has entered, but you also inherit their mistakes. Using someone else’s model involves taking responsibility for someone else’s work, sometimes from people you’ve never even met! If you’re going ...