Chapter 13

Ten Strategies for Reducing Error


check Minimizing the errors in your financial models

check Focusing on the details that matter

If you aren’t absolutely paranoid about making a mistake in your financial model, you should be! Even people with a little experience using Microsoft Excel know how easy it is to get something wrong. Both formula and logic errors are easy to make — and they’re prevalent in corporate financial models. As a financial modeler, you have to be vigilant about errors as you build the model. In this chapter, I offer up ten strategies you can employ to reduce errors when building your financial models.

Using the Enter Key

The most common errors in financial models are silly formula mistakes — for example, picking up the wrong cell or missing a dollar sign in the cell referencing. Because these mistakes are the easiest ones to make, they’re also the easiest to avoid.

tip After entering a formula in a cell, press the Enter key. Don’t just click somewhere else.

There are two reasons not to click somewhere else after entering a formula.

  • You may accidentally pick up an incorrect cell, which then autocorrects to a completely incorrect formula, as shown ...

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