Financial Simulation Modeling in Excel

A FEW WORDS ABOUT SEMANTICS

Learning about financial modeling can be tricky in written instructional form since words translate into commands, which can be very specific for computer programs. To avoid confusion, the following is a quick guide to the words that are used in this text and how they translate into the required actions the reader must perform. The key is to understand that there are four main operations we will perform on a cell and a fifth word to be aware of:

Enter a value. When the Model Builder exercises ask for a value to be entered, this will be a number, date, or Boolean (TRUE or FALSE) value. These are values that will be referenced for some type of calculation purpose.

Enter a label. A label is text in a cell to help the model operator understand values and formulas in relative proximity. Note that I use the word as a verb as well. For example, I may say label A1, “Project Basic Cash Flow”. This means that the text “Project Basic Cash Flow” should be entered into A1. Also, there are times when I will use the word label with a number. This means that a number will be used as a label and not referenced in the actual calculation on the sheet or be used by the VBA code. Mostly these types of numbers will be used to describe time periods.

Name a cell or range of cells. Not to be confused with labeling, naming is a specific technique that converts the reference of a cell or range to a user defined name. This is done using the Name Box in the upper left corner of ...