Principles of Financial Modelling - Rees, Michael

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Auteur(s) : Rees, Michael

Editeur : Wiley

Langue : Anglais

Parution : 01/07/2018

Format : Moyen, de 350g à 1kg

Nombre de pages : 544.0

ISBN : 111890401X

The comprehensive, broadly-applicable, real-world guide to financial modelling Financial Modelling in Practice, Second Edition covers the full spectrum of financial modelling tools and techniques to provide practical skills grounded in real-world scenarios. Based on rigorously-tested training materi

Résumé :

The comprehensive, broadly-applicable, real-world guide to financial modelling

Principles of Financial Modelling - Model Design and Best Practices Using Excel and VBAcovers the full spectrum of financial modelling tools and techniques in order to provide practical skills that are grounded in real-world applications. Based on rigorously-tested materials created for consulting projects and for training courses, this book demonstrates how to plan, design and build financial models that are flexible, robust, transparent, and highly applicable to a wide range of planning, forecasting and decision-support contexts. This book integrates theory and practice to provide a high-value resource for anyone wanting to gain a practical understanding of this complex and nuanced topic. Highlights of its content include extensive coverage of:

• Model design and best practices, including the optimisation of data structures and layout, maximising transparency, balancing complexity with flexibility, dealing with circularity, model audit and error-checking
• Sensitivity and scenario analysis, simulation, and optimisation
• Data manipulation and analysis
• The use and choice of Excel functions and functionality, including advanced functions and those from all categories, as well as of VBA and its key areas of application within financial modelling

The companion website provides approximately 235 Excel files (screen-clips of most of which are shown in the text), which demonstrate key principles in modelling, as well as providing many examples of the use of Excel functions and VBA macros. These facilitate learning and have a strong emphasis on practical solutions and direct real-world application.

For practical instruction, robust technique and clear presentation,?Principles of Financial Modelling is the premier guide to real-world financial modelling from the ground up. It provides clear instruction applicable across sectors, settings and countries, and is presented in a well-structured and highly-developed format that is accessible to people with different backgrounds.

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Biographie:

MICHAEL REES, D.PHIL., MBA, operates globally to help senior executives to solve their most complex problems in the areas of decision support, business strategy, value-creation, risk assessment, and optimisation. He combines practical experience from top firms with an exceptional analytic record, and is among the world's leading authors and instructors in the field of financial and risk modelling. His special interest is in cases where issues in strategy, business economics, and valuation are best addressed using practical advanced quantitative approaches.

He has a Doctorate in Mathematical Modelling and Numerical Algorithms, and a B.A. with First Class Honours in Mathematics, both from Oxford University in the UK. He has an MBA with distinction from INSEAD in France. He also studied for the Certificate of Quantitative Finance, graduating top of the class for course work, and receiving the Wilmott Award for the highest final exam mark.

He has approximately 30 years' business and finance experience, in many sectors, including oil, gas, energy and resources, private equity, health care, biotechnology, chemicals, construction, engineering, and insurance....

Sommaire:

Preface xxv

About the Author xxvii

About the Website xxix

Part One Introduction to Modelling, Core Themes and Best Practices 1

Chapter 1 Models of Models 3

Introduction 3

Context and Objectives 3

The Stages of Modelling 3

Backward Thinking and Forward Calculation Processes 4

Chapter 2 Using Models in Decision Support 7

Introduction 7

Benefits of Using Models 7

Providing Numerical Information 7

Capturing Influencing Factors and Relationships 7

Generating Insight and Forming Hypotheses 8

Decision Levers, Scenarios, Uncertainties, Optimisation,? Risk Mitigation and Project Design 8

Improving Working Processes, Enhanced Communications and Precise Data Requirements 9

Challenges in Using Models 9

The Nature of Model Error 9

Inherent Ambiguity and Circularity of Reasoning 10

Inconsistent Scope or Alignment of Decision and Model 10

The Presence on Biases, Imperfect Testing, False Positives and Negatives 11

Balancing Intuition with Rationality 11

Lack of Data or Insufficient Understanding of a Situation 12

Overcoming Challenges: Awareness, Actions and Best Practices 13

Chapter 3 Core Competencies and Best Practices: Meta-themes 15

Introduction 15

Key Themes 15

Decision-support Role, Objectives, Outputs and Communication 16

Application Knowledge and Understanding 17

Skills with Implementation Platform 17

Defining Sensitivity and Flexibility Requirements 18

Designing Appropriate Layout, Input Data Structures and Flow 20

Ensuring Transparency and Creating a User-friendly Model 20

Integrated Problem-solving Skills 21

Part Two Model Design and Planning 23

Chapter 4 Defining Sensitivity and Flexibility Requirements 25

Introduction 25

Key Issues for Consideration 25

Creating a Focus on Objectives and Their Implications 26

Sensitivity Concepts in the Backward Thought and Forward Calculation

Processes 26

Time Granularity 30

Level of Detail on Input Variables 30

Sensitising Absolute Values or Variations from Base Cases 31

Scenarios Versus Sensitivities 32

Uncertain Versus Decision Variables 33

Increasing Model Validity Using Formulae 34

Chapter 5 Database Versus Formulae-driven Approaches 37

Introduction 37

Key Issues for Consideration 37

Separating the Data, Analysis and Presentation (Reporting) Layers 37

The Nature of Changes to Data Sets and Structures 39

Focus on Data or Formulae? 40

Practical Example 42

Chapter 6 Designing the Workbook Structure 47

Introduction 47

Designing Workbook Models with Multiple Worksheets 47

Linked Workbooks 47

Multiple Worksheets: Advantages and Disadvantages 48

Generic Best Practice Structures 49

The Role of Multiple Worksheets in Best Practice Structures 49

Type I: Single Worksheet Models 50

Type II: Single Main Formulae Worksheet, and Several Data Worksheets 50

Type III: Single Main Formulae Worksheet, and Several Data and Local Analysis Worksheets 51

Further Comparative Comments 51

Using Information from Multiple Worksheets: Choice (Exclusion) and Consolidation (Inclusion) Processes 52

Multi-sheet or Three Dimensional Formulae 53

Using Excel's Data/Consolidation Functionality 54

Consolidating from Several Sheets into a Database Using a Macro 55

User-defined Functions 56

Part Three Model Building, Testing and Auditing 57

Chapter 7 Creating Transparency:...