About the Authorxiii
Brief Summaryxv
Prefacexvii
Chapter 1: Better Learning Decisions1
 How to Learn (and Teach) Financial Modeling2
 Learning Financial Modeling2
 Teaching Financial Modeling3
 Steps in Developing a Financial Model4
 Some Common Excel Terminology5
 Good Financial Modeling Practices5
 Demonstration Exercise5
 Case Facts6
Part 1: Decisions Made about the Future Planning19
Chapter 2: Break Even Decisions21
 Background Theory22
 Cost-Volume-Profit Analysis22
 Determining Cost Functions22
 Break-even Volumes22
 Financial Management Techniques22
 Relevant MS-Excel Functionality23
 Demonstration Exercise24
 Case Facts24
Chapter 3: Times Series Forecasting Decisions39
 Background Theory40
 Types of Forecasting Models40
 Detecting Patterns in Time40
 Time Series Forecasting Methods40
 Financial Management Techniques41
 Relevant Excel Functionality43
 Demonstration Exercise43
 Case Facts43
 Step 1: Create a Scatterplot to Assess whether a Pattern Exists43
 Step 2: Perform a Moving Average Forecast for at Least Three Time Intervals43
 Step 3: Perform an Exponential Smoothing Forecast Using at Least Two Dampening Factors47
 Step 4: Optimize the Exponential Smoothing Dampening Coefficient54
 Step 5: Calculate and Evaluate the MAPE for all Forecasts54
Chapter 4: Capital Budgeting Decisions61
 Background Theory62
 The Importance of Cash Flows62
 NPV, IRR, and Payback Period62
 The Discount Rate62
 Financial Management Techniques63
 Relevant Excel Functionality63
 Demonstration Exercise63
 Case Facts64
 Step 1: Determining the Discount Rate Using a Risk-adjusted Cost of Capital64
 Step 2: Determining the Incremental Net Cash Flows for the Project65
 Step 3: Developing a Base Case Scenario for to the Key Decision Variables65
 Step 4: Determining the NPV, IRR and Payback Period for Each Scenario68
Chapter 5: Regression Analysis Decisions77
 Background Theory78
 Finding Correlations78
 Determining Causation78
 Regression Analysis78
 Financial Management Techniques79
 Relevant Excel Functionality80
 Demonstration Exercise80
 Case Facts80
 Step 1: Exploring Relationships81
 Step 2: Creating Scatterplots82
 Step 3: Measuring Correlations84
 Step 4: Determine Dependent and Independent Variables85
 Step 5: Create a Single-variable Regression85
 Step 6: Create a Multivariable Regression85
 Step 7: Optimize the Model95
 Nonnumeric Variables95
 Interaction Variables97
Part 2: Decisions Made about the Present Control103
Chapter 6: Linear Programming Decisions105
 Background Theory106
 Some History106
 Product Mix106
 Production Scheduling106
 Financial Management Techniques106
 Relevant Excel Functionality107
 Demonstration Exercise 1107
 Case Facts107
 Step 1: Create the Excel Worksheet Model109
 Step 2: Complete the Excel Solver Dialog Box109
 Step 3: Activate Solver and Generate the Sensitivity Report113
 Demonstration Exercise 2118
 Case Facts118
Chapter 7: Business Valuation Decisions127
 Background Theory128
 Analyzing the Cost of Capital128
 Pro-forma Financial Statements128
 Forecasting Assumptions128
 Financial Management Techniques129
 Relevant Excel Functionality129
 Demonstration Exercise129
 Case Facts132
 Step 1: Calculate Financial Ratios for Forecasting133
 Step 2: Develop Reasonable Forecast Assumptions133
 Step 3: Create the Forecast Income Statement and Balance Sheet134
 Step 4: Convert Net Income into Cash Flows134
 Step 5: Calculate the Present Value of the Cash Flows140
 Step 6: Determine the Share Value and Test Sensitivities140
Chapter 8: Pivot Tables Decisions149
 Background Theory150
 Everything Old Is New Again150
 Some Data Terminology151
 Types of Data Analytics151
 Financial Management Techniques152
 Relevant Excel Functionality153
 Creating Data Tables153
 Cleaning Data156
 Demonstration Exercise159
 Case Facts159
 Descriptive Analytics159
 Step 1: Identify the Fields Needed to Answer the Question167
 Step 2: Put the Fields in Rows and Columns167
 Step 3: Determine the Type of Values Function167
 Step 4: Select a Field for the Values Function167
 Step 5: Numeric Format for Results167
 Diagnostic Analytics172
 Some Additional Analytic Functions with Power Pivot172
Part 3: Decisions Made about the Past Feedback187
Chapter 9: Financial Dashboard Decisions189
 Background Theory190
 Some Common Financial Measures190
 Some Dashboard Principles190
 Financial Management Techniques191
 Relevant Excel Functionality191
 Demonstration Exercise191
 Step 1: Create the Database192
 Step 2: Create the Data Engine192
 Step 3: Create the References195
 Step 4: Create the Dashboard195
 About Power BI (Business Intelligence)200
 Demonstration Exercise201
 Loading Power BI201
 Using Power BI206
 Using Power Query206
 Creating Data Visualizations213
 Current Ratio Metric222
 Profitability Metric228
 Cash Flow Metric228
 Return on Equity Metric233
 Sales and Income Trends233
Chapter 10: Budget Management Decisions241
 Background Theory242
 Budget Development242
 Budget Management243
 Cash Flow Budgets243
 Financial Management Techniques243
 Relevant Excel Functionality244
 Demonstration Exercise244
 Case Facts244
 Preparing the Income Statement Budget245
 Preparing the Monthly Income Statement Budget245
 Preparing the Cash Flow Budget245
 Preparing the Analysis of Variances245
Chapter 11: Amortization Table Decisions259
 Background Theory260
 Corporate Bonds260
 Bank Borrowing260
 Property, Plant, and Equipment260
 Financial Management Techniques261
 Using MS-Excel Functionality261
 Demonstration Exercise261
 Corporate Bonds261
 Bank Borrowing263
 Property, Plant, and Equipment263
Part 4: Decisions Made in Time Putting It All Together275
Chapter 12: Making a Lot of Decisions277
 Background Theory277
 (Capstone) Demonstration Exercise277
 Case Facts278
Appendix 1 Excel Shortcut Keys321
Appendix 2 Common Financial Ratios325
Index327
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