by Paul Barnhurst
<div class="ql-block" data-block-id="block-6723006e-d527-40b8-9504-6e3ca95a18e9">Financial Modeler's Corner is a podcast where we talk all about the art and science of financial modeling with distinguished Financial Modeler's from around the globe. Financial Modeler's Corner is hosted by Paul Barnhurst a global thought leader in the field of finance. </div><div class="ql-block" data-block-id="block-6723006e-d527-40b8-9504-6e3ca95a18e9"><br></div><div class="ql-block" data-block-id="block-6723006e-d527-40b8-9504-6e3ca95a18e9"> </div><div class="ql-block" data-block-id="block-6a578802-6842-4306-ace9-b810365a1666"></div><div class="ql-block" data-block-id="block-7df8c599-5669-4122-8cf3-f7e0077021bc">The Financial Modeler's Corner podcast is brought to you by Financial Modeling Institute. FMI offers the most respected accreditations in financial modeling. </div>
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June 11, 2024
<p>Welcome to the Financial Modeler's Corner (FMC), where we discuss the Art and Science of Financial Modeling with your host Paul Barnhurst.</p><p><br></p><p>Financial Modeler's Corner is sponsored by the Financial Modeling Institute (FMI), the most respected accreditation in Financial Modeling globally.</p><p><br></p><p>In today’s episode, Paul engages in a conversation with Cameron and Nicholas Hay to discuss dynamic arrays in financial modeling. Cameron and Nicholas share their experiences and insights on using dynamic arrays to build fully dynamic models, avoiding common pitfalls, and the benefits of this approach.</p><p><br></p><p>Cameron and Nicholas are seasoned financial modeling experts and co-founders of Finomatic Consulting. Their practical advice and innovative tips have helped countless professionals enhance their modeling skills.</p><p><br></p><p>Key takeaways from this week's episode include:</p><p><br></p><ul><li>Use dynamic arrays to reduce the number of formulas and potential error points. Clearly separate inputs, calculations, and outputs into distinct sheets. This enhances clarity and ease of use.</li></ul><br/><p><br></p><ul><li>Ensure uniform column and row structures across sheets. This consistency minimizes errors and simplifies formula management, making models easier to audit and understand.</li></ul><br/><p><br></p><ul><li>Mixing traditional Excel formulas with dynamic arrays reduces the benefits. A complete commitment ensures better performance and error reduction.</li></ul><br/><p><br></p><ul><li>Using graphs and charts helps quickly identify trends and anomalies, making it easier to ensure realistic assumptions and accurate models.</li></ul><br/><p><br></p><ul><li>Establishes a solid foundation, ensuring you learn best practices early on, which prevents the development of bad habits and enhances overall modeling skills.</li></ul><br/><p><br></p><ul><li>Implementing dynamic arrays can drastically reduce the file size and complexity of models, making them more efficient and manageable.</li></ul><br/><p><br></p><ul><li>Issues like mixed calculations and unrealistic assumptions emphasize the importance of thorough checks and realistic inputs in financial modeling.</li></ul><br/><p><br></p><p>Download a sample fully dynamic 3-statement model <a href="https://www.thefpandaguy.com/excel-files" rel="noopener noreferrer" target="_blank">Excel Files — The FP&A Guy (thefpandaguy.com)</a> courtesy of Cameron and Nicolas Hay. </p><p><br></p><p><strong>Quotes:</strong></p><p>Here are a few relevant quotes from the episode on financial analysis and modeling:</p><p><br></p><p>"A blank Excel workbook doesn't have any errors in it until you add data and formulas. Minimizing the number of formulas should reduce the error potential of the file.”</p><p><br></p><p>“With business, if you can understand how cash flows around a business, that's you can get in and really understand a business.”</p><p><br></p><p>“If you're going to dip your toe into dynamic arrays, you've got to make sure you commit fully with 100% commitment.”</p><p><br></p><p>Sign up for the<a href="https://fminstitute.com/afm/" rel="noopener noreferrer" target="_blank"> Advanced Financial Modeler Accreditation </a>Today and receive 15% off by using the special show code ‘Podcast’. Visit<a href="http://www.fminstitute.com/podcast" rel="noopener noreferrer" target="_blank"> www.fminstitute.com/podcast</a> and use code<strong> “Podcast” </strong>to save 15% when you register. </p><p><br></p><p>Go to<a href="https://earmarkcpe.com/" rel="noopener noreferrer" target="_blank"> https://earmarkcpe.com</a>, download the app, take the quiz and you can receive CPE credit. </p><p><br></p><p>View and download the Financial Modeling Code at <a href="https://www.icaew.com/-/media/corporate/files/technical/technology/excel/financial-modelling-code.ashx" rel="noopener noreferrer" target="_blank">financial-modelling-code.ashx...
June 4, 2024
<p>Welcome to the Financial Modeler's Corner (FMC), where we discuss the Art and Science of Financial Modeling with your host Paul Barnhurst.</p><p>Financial Modeler's Corner is sponsored by the Financial Modeling Institute (FMI), the most respected accreditation in Financial Modeling globally.</p><p>In today’s episode, Paul engages in a conversation with Gary Knott, to discuss invaluable insights and tips on avoiding common Excel pitfalls, structuring workbooks for success, and the importance of consistency and clarity.</p><p>Gary is a seasoned financial modeling expert and author of "Avoid Excel Horror Stories." He shares his golden ground rules for Excel modeling. With a background at Deloitte and his successful consultancy, Gary's practical advice and innovative tips have helped countless professionals enhance their modeling skills.</p><p>Key takeaways from this week's episode include:</p><ul><li>Organize workbooks with clear, logical structures. Separate inputs, calculations, and outputs into distinct sheets. Use consistent naming conventions and separator sheets to enhance clarity and ease of use.</li></ul><br/><p><br></p><ul><li>Maintaining a consistent design throughout the workbook. Use uniform column and row structures across sheets. Consistency minimizes errors and simplifies formula management, making models easier to audit and understand.</li></ul><br/><p><br></p><ul><li>Formal training in financial modeling is crucial. It establishes a solid foundation, ensuring you learn best practices early on, which prevents the development of bad habits and enhances overall modeling skills.</li></ul><br/><p><br></p><ul><li>Real-life horror stories highlight common errors, such as improper data copying and pasting. Ensuring consistent data formats and understanding the intricacies of your calculations are essential to avoid costly mistakes.</li></ul><br/><p><br></p><ul><li>Use Macros for repetitive tasks like generating output sheets, not for complex calculations. They help automate processes and reduce manual errors but should be applied judiciously to maintain model integrity.</li></ul><br/><p><br></p><ul><li>Implement data validation to restrict inputs. This minimizes user errors by ensuring only valid data entries are made, such as positive numbers or specific date ranges, enhancing the reliability of your models.</li></ul><br/><p><br></p><ul><li>Regularly test models to ensure accuracy. Use master check sheets to consolidate checks and quickly identify errors. This proactive approach helps maintain the model’s integrity and reliability over time.</li></ul><br/><p><br></p><p><strong>Quotes:</strong></p><p>Here are a few relevant quotes from the episode on financial analysis and modeling:</p><p><br></p><p>"Consistency is key." I think of all the rules there are, that's the one. If you follow that one, that can bring you a long way in terms of getting a reliable model.</p><p><br></p><p>“Certainly, getting trained early, not trying to learn it yourself, but taking some formal training course so you can learn the basics.”</p><p><br></p><p>“I'm always a very keen fan of putting checks in models, collating them all on a master check sheet, and then adding them all up.”</p><p><br></p><p>"If the difference is zero, then your balance sheet balances. You can send that through to a master check sheet. Then if you add them all up, all the checks up and they're totally zero, then you haven't identified any issues"</p><p><br></p><p>Sign up for the<a href="https://fminstitute.com/afm/" rel="noopener noreferrer" target="_blank"> Advanced Financial Modeler Accreditation </a>Today and receive 15% off by using the special show code ‘Podcast’. Visit<a href="http://www.fminstitute.com/podcast" rel="noopener noreferrer" target="_blank"> www.fminstitute.com/podcast</a> and use code<strong> “Podcast” </strong>to save 15% when you register. </p><p><br></p><p>Go to<a href="https://earmarkcpe.com/" rel="noopener noreferrer" target="_blank">
May 21, 2024
<p>Welcome to the Financial Modeler's Corner (FMC), where we discuss the Art and Science of Financial Modeling with your host Paul Barnhurst.</p><p>Financial Modeler's Corner is sponsored by the Financial Modeling Institute (FMI), the most respected accreditation in Financial Modeling globally.</p><p>In today’s episode, Paul engages in a conversation with Stephen Aldridge, to discuss developing and implementing Financial Modeling standards and best practices, including insights from his work on the Financial Modelling Code. This conversation is packed with practical advice and fascinating anecdotes.</p><p>Stephen, the founder of Numeritas, has over 20 years of experience in Financial Modeling. Stephen has worked with and for top firms like KPMG and Deloitte. With a background in engineering, sales, and corporate management, he offers a unique perspective on Financial Modeling standards and best practices.</p><p><strong>Key takeaways from this week's episode include:</strong></p><ul><li>Standards in Financial Modeling ensure consistency and reliability in financial models. Having an agreed-upon approach within a firm allows for seamless transitions when different individuals work on the same model, promoting accuracy and ease of understanding.</li></ul><br/><ul><li>Financial modeling involves various acceptable methodologies, making consensus on best practices challenging. Flexible guidelines, like the Financial Modeling Code, help streamline processes and ensure consistency across different approaches.</li></ul><br/><p><br></p><ul><li>Prototyping in Financial Modeling bridges the gap between modelers and users by creating early mock-ups of input areas. This approach ensures the model meets user expectations and captures necessary inputs accurately, saving time and resources in the long run.</li></ul><br/><p><br></p><ul><li>Human factors, such as biases and assumptions, significantly impact financial modeling. Effective communication and understanding stakeholder interactions are crucial for creating accurate and practical models.</li></ul><br/><p><br></p><ul><li>In implementing Modeling Standards, Firms should adapt modeling standards to their specific needs with a focus on basic principles like avoiding hard coding and maintaining consistency to enhance model quality and reliability.</li></ul><br/><p><br></p><p><strong>Quotes: </strong> </p><p><br></p><p>Here are a few relevant quotes from the episode on financial analysis and modeling:</p><blockquote><em>“</em>I suppose a few things within a firm, you probably want a house style, at least an agreed approach, so that if somebody else picks up the model, has to work on it or somebody leaves, then you've got continuity.<em>”</em></blockquote><blockquote><br></blockquote><blockquote><br></blockquote><blockquote><em>“</em>Prototyping helps the user to see what they like to get. If they think, oh no, this isn't what I would imagine, what about these things then? You're getting all that out in the open before you start coding.<em>”</em></blockquote><blockquote><br></blockquote><blockquote><br></blockquote><blockquote><em>“</em>It's very important to think about the human aspect of modeling and what goes around it as well, and the assumptions we make and the bias that can creep in and all these sorts of things.<em>”</em></blockquote><blockquote><br></blockquote><blockquote><br></blockquote><blockquote><em>“</em>Keep the user at the center of everything you do, keep them at the center of your thinking, and that way you'll produce a model that's much easier to use, and likely to have a longer life.<em>”</em></blockquote><p><br></p><p>Sign up for the<a href="https://fminstitute.com/afm/" rel="noopener noreferrer" target="_blank"> Advanced Financial Modeler Accreditation </a>Today and receive 15% off by using the special show code ‘Podcast’. Visit<a href="http://www.fminstitute.com/podcast" rel="noopener noreferrer" target="_blank"> www.fminstitute.com/podcast </a>and use...
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