Modeling Structured Finance Cash Flows with Microsoft® Excel®: A Step-by-Step Guide

CHAPTER 11

Conclusion

The best financial modelers understand both technical methodologies and business concepts. One without the other produces an Excel expert or a standard financial analyst. An experienced financial modeler can deconstruct a business concept and transfer the idea into an application or programming code that runs accurately, efficiently, and transparently. The same financial modeler understands how changing assumptions impact the transaction and the implications such adjustments have on the performance of the deal.

So far this text has attempted to achieve both technical and conceptual understanding for structured finance. A model has been constructed in a step-by-step technical manner with business-related theories explained along the way. A section has been dedicated to understanding the model’s mechanics, outputs, and the ensuing business interpretations. The only part that lacks discussion is the higher level view—about how professionals in different industries look at the model differently and garner information relevant to their position.

THE INVESTMENT BANKER’S PERSPECTIVE

As some reader’s may have noticed, this book is written with a slight bias towards investment banks. Often bankers are the people who construct a transaction model, which is used by most parties involved in a deal. For this reason, a strong focus is put on the bank’s perceived risks and protecting against them. Even among banks this risk differs depending on who ends up owning the ...