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20 of 21 people found the following review helpful
5.0 out of 5 stars An excellent guide for the novice and the professional alike
This book is a must for anyone who wants to put together a financial model or a business plan. It takes the novice Exel user and helps him become an experienced business modeller through the use of clear and helpful worked examples.
As an investment banker for whom business modelling is a part of my typical working day I also found much to learn, and my modelling is...
Published on 18 Nov 2001

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9 of 9 people found the following review helpful
3.0 out of 5 stars Good introduction, but not enough about modelling uncertainty
This Guide is a workmanlike introduction to the craft of modelling in Excel business cash flow and financial statements, but it could do a lot more in the area of modelling uncertainty.

The strong point of the book is its emphasis on structuring the model and the modelling process. Models tend to take on a life of their own after the initial development, and...
Published on 2 Jun 2009 by Graham Jeffery


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9 of 9 people found the following review helpful
3.0 out of 5 stars Good introduction, but not enough about modelling uncertainty, 2 Jun 2009
By 
Graham Jeffery (London, UK) - See all my reviews
(REAL NAME)   
This Guide is a workmanlike introduction to the craft of modelling in Excel business cash flow and financial statements, but it could do a lot more in the area of modelling uncertainty.

The strong point of the book is its emphasis on structuring the model and the modelling process. Models tend to take on a life of their own after the initial development, and sometimes even before the first build is complete, and time spent in thinking, planning and design is usually a very worthwhile investment. This is particularly important if there are multiple people involved in the model's design and use, and the book covers how one might organise a modelling project.

The principal modelling task is designing the mathematical model that produces the desired time series of sales, costs, etc, over time, based on a handful of input parameters. The book goes into some detail about the formulae needed to render the different kinds of time series one might encounter in a typical business model, covering areas such as macroeconomics, forecasting revenue (with good discussion of times series analysis and regression techniques), operating costs, capital expenditure, working capital, and funding, along with ancillary issues such as depreciation, tax, financial statements and company valuation methods.

Also welcome are the chapters on the often overlooked topics of testing, debugging and documenting a model. There is an introduction to recording macros and programming simple Visual Basic code, but anyone serious about programming Excel with VBA can find better material elsewhere.

As I said, a good introduction. It assumes some basic understanding of Excel and business terminology, but not a lot else. There are lots of practical spreadsheet examples with the formulae all well explained, although sometimes the text description is a little disconnected from the screenshot. It is a pity the authors did not go further in several key areas.

* The book introduces the concept of Excel range names, but does not do them enough justice. The naming of ranges is the single most important underused feature in Excel, and mastering its use will dramatically reduce the bugs in a model and, if names are chosen sensibly, provide instant documentation and a model that has a fighting chance of being understood by the next modeller who picks it up and has to maintain or update it.

* Sensitivity analysis is covered in just three paragraphs, when this is probably the single most important use of a model. Anyone can create a model that produces an answer (eg, the NPV of a business opportunity) for a given set of assumptions. But we all know these assumptions, if they represent forecasts of the future, are wrong. Regarding the model as a simulation and playing with ranges of assumptions (testing various "what-ifs"), so that you build a full understanding of the drivers of value and risk in the business situation, is where the real value of modelling lies.

* Monte Carlo simulation is again covered only briefly and with a rudimentary DIY approach. There is no mention of the many tools available that can drive a well-designed model through probabilistic analysis.

Finally, I have to comment on the chapter on macroeconomics, which makes use of the sine function to model economic cycles. Given the discussion in the press about the current recession and whether it will be V- or U-shaped (or maybe W- or--preserve us!--L-shaped), this seems hopelessly simplistic for any practical use. This jibes with the rest of the book, which is practical. However, the example does help introduce how to parameterise a time series, in this case with the cycle time and amplitude.
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20 of 21 people found the following review helpful
5.0 out of 5 stars An excellent guide for the novice and the professional alike, 18 Nov 2001
By A Customer
This book is a must for anyone who wants to put together a financial model or a business plan. It takes the novice Exel user and helps him become an experienced business modeller through the use of clear and helpful worked examples.
As an investment banker for whom business modelling is a part of my typical working day I also found much to learn, and my modelling is more efficient and effective because of this book.
I recommend it without hesitation.
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15 of 16 people found the following review helpful
5.0 out of 5 stars Excellent, 11 Oct 2001
By A Customer
This is an excellent guide to modelling. I had some experience in Excel (I had used basic functions which is probably the minimum level of experience required for this book) but no experience whatsoever of modelling - I have since used most of the techniques described to good effect.
It is also worth noting that my manager, who had considerably more experience than I did, also found this book to be thought-provoking, clearly written and incredibly useful!
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12 of 15 people found the following review helpful
5.0 out of 5 stars I bought this book a week ago and I highly recommend it, 23 Jan 2004
I am an accountant who has inherited the job of preparing next year's budgets for the asset finance arm of an investment bank. I needed to get up to speed on the latest modelling techniques. This book covers key areas well and gives some great keystroke instructions to carry out specific functions. I bought about three books on the subject and, having made some comparisons, this one is bang up to date with what is happening in the world of modelling nowadays. Thanks to the clear layout I was able to skim read it in about six hours after receiving it.
Being the helpful sort of person that I am, let me assist you further by directing you to visit www:\financialmodelling.net and downloading the example spreadsheet for 10. (Paynet takes a few days to go through before you can get the PIN number, so don't leave it until the last minute).
These two recommendations are the distillation of all my recent efforts to master financial modelling. Do this and you will be turning in some good models.
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6 of 8 people found the following review helpful
2.0 out of 5 stars Not really sure who this book is aimed at!, 14 Jun 2009
Verified Purchase(What is this?)
As a qualified accountant (CIMA) who would describe my excel abilities as advanced I bought the book in the hope of sharpening up my modelling skills.

As the title of this review suggests I'm left slightly unsure as to who this book is aimed at as it seems to offer great breadth but no depth.

The Bad:
- as a finance guy there just isn't enough depth in the finance elements to be much use to me.
- as a non economist there isn't enough explanation of the techniques for me be able to employ them without further reading.
- there's little in the way of the seriously high level excel stuff I was hoping for yet I struggle to see how the genuine novice is going to be able to employ a lot of the more advanced techniques such as offset formulas.
- the excel screenshot images are of a poor quality.
- unlike most excel based books no cd rom is included.

The Good:
- the book is well written by knowledgeable authors
- the first 60 pages give a good insight into modelling best practice which are useful to those who have never seen a professionally built model

The only people who will really get something out of this are non accountants with decent excel skills. For finance professionals I recommend Benninga's Financial Modelling: Financial Modeling

And for those looking to improve their excel Walkenbach's Excel 2003 Formulas: Excel 2003 Formulas and his VBA programming book: Excel 2003 Power Programming with VBA. Both of these can be picked up for a pittance on 'marketplace'.
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4.0 out of 5 stars A Useful Guide - Recommended to All Excel Users, 3 Jan 2013
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This review is from: The Economist Guide to Business Modelling (Hardcover)
It is a very useful book. I have found its detailed knowledge of Excel helpful. Particular points include its emphasis the use of keyboard shortcuts, Excel functions to speed up modelling, scenario building as a means of handling risk and uncertainty and systematic model construction are all well presented. However, although it is a new edition and claims to be updated, in many respects it does not fully incorporate changes in Excel 2010.
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5 of 7 people found the following review helpful
4.0 out of 5 stars Professional Models, 29 Jun 2002
Great book, the lonely planet equivalent to business modelling. The presentation of the book makes it ideal to dip into to solve problems I may have and I have used the examples almost line by line in my models. The section on macros is fantastic and even the simplest touches make any model look much more professional.
I am now the office almanac on excel...worth every penny.
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0 of 3 people found the following review helpful
5.0 out of 5 stars Detailed, structured and informative, 7 May 2007
This book is an excellent guide to business modelling. I found this book to cover modelling at a very practical level. The book is ideal for users who want to become more disciplined and develop models for accurate decision making - Highly recommended for marketing professionals interested in risk management and analysis.
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The Economist Guide to Business Modelling by Graham Friend (Hardcover - 11 Aug 2011)
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