Building Financial Models : A Guide to

Financial modeling is essential for determining a company's current value and projecting its future performance, yet few books explain how to build models for accurately interpreting financial statements. Building Financial Models is the first book to correct this oversight, unveiling a step-by-step process for creating a core model and then customizing it for companies in virtually any industry. Covering every aspect of building a financial model, it provides a broad understanding of the actual mechanics of models, as well as their foundational accounting and finance concepts.

John S. Tjia is a founding partner in TMG Associates, LLC, a consulting firm with investment and commercial banking clients that specializes in financial modeling for corporate finance. Tjia is the former vice president in charge of the Models Group at JPMorgan Chase, and led the team that was responsible for designing and developing several generations of the analysis and execution models used by the firm's investment banking division worldwide. He has also taught modeling and valuation classes to hundreds of analysts and associates.

Introduction

v

A Financial Projection Model

1

(12)

Design Principles for Good Model Building

13

(10)

Starting Out

23

(24)

Your Model-Building Toolbox: F Keys and Ranges

47

(16)

Your Model-Building Toolbox: Functions

63

(46)

Guerilla Accounting for Modeling

109

(10)

Balancing the Balance Sheet

119

(26)

Income Statement and Balance Sheet Accounts

145

(10)

Putting Everything Together

155

(38)

The IS and BS Output Sheets

193

(6)

The CF Sheet

199

(10)

Ratios: Key Performance Indicators

209

(18)

Forecasting Guidelines

227

(10)

The Cash Sweep

237

(20)

The Cash Flow Variation for Cash Sweep

257

(14)

Recording Macros

271

(16)

On-Screen Controls

287

(10)

Bells and Whistles

297

(18)

Writing a Macro in Visual Basic for Applications

315

(14)

Index

329

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Building Financial Models : A Guide to Creating and Interpreting Financial Statements

Summary

Author Biography

Table of Contents

Supplemental Materials