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

Introduction

The basic idea behind any financial model is to bring order and understanding to the numerous variables and complex information that financial transactions present. Learning to build one from a blank spreadsheet is often a daunting task to newcomers because of the sheer amount of information and nearly infinite methods of manipulating data. This book seeks to bring a systematic, well-explained method to constructing a particularly popular and adaptable type of model—the cash flow model. Through the use of thorough explanation, graphical examples, and the simultaneous application of learned methods featured in the Model Builder exercises, anyone with a background in finance and basic spreadsheet understanding can develop and understand a fully functioning financial model.

The most significant aspect of the model that will be created is that it is constructed within a real-world context focusing on the structured finance industry. Many other financial modeling books explain either application functions or specific theoretical concepts. These books are good for learning a program or understanding an academic topic, yet they are difficult to translate into a functioning financial model. By combining specific application instruction with theory, this book teaches skills that can be applied instantly to professional level modeling.

While the book focuses on structured finance analysis, the model created here can be adapted for use in other fields. A fundamental question ...