How to Analyze Financial Models When Clocks are Ticking – Part II
January 3, 2014
Following our previous blog on Financial Modeling, we received a mail from one of our readers who raised an interesting question. Our reader asked “What if the analysis takes more time than what the analyst expects and he ends up being late for his lunch?” Following that question, he said “Speaking from my personal experience, the result would be bizarre as the girl would no doubt be offended and the thought of being late would potentially mess up the analysis as well.” He asked us to suggest something that can speed up the analysis so that the analyst in the picture can actually dance on the stage without the fear of dancing solo!
As the devoted team that we are, we have attempted to bring forth this little piece on Financial Models so that we can come up with an answer to our reader’s query.
A major time saver can be the identification of circular referencing. If circular referencing is present anywhere in the model, it can leave you knocking your head against a wall (not literally!) endlessly in a confused state and will definitely lead to your fall to disgrace. It becomes absolutely vital to be aware about the circular referencing at the beginning and prevent your precious moments.
Secondly, if there is VBA involved in the model, make sure that the model developer has inserted adequate comments to make the incorporated VBA understandable.
Next, our analyst can speed up the auditing process by differentiating the formulas or hard coded values. For doing so, he has two alternatives. First, he can press (ctrl+`) to show formulas and hard coded values. He can then apply distinctive formatting to different things and return to normal excel view by again pressing (ctrl+`). This way he will have the distinct values which will speed up the auditing in real ways. Or he can select the sheet, press F5 that will open up the ‘Go to’ dialogue box and under the special, select the constants and uncheck the text option.
This will select the constants for you. Now similar to the last time, you can add distinctive formatting here and ease his way to auditing.
Fourthly, our analyst must check for any iterations present in the model and if found, can question the modeler about it. Adding to this, if there is any End User Certificate in model, then his task is made more convenient as he can check the internal governance and realize the model will greater ease.
Moreover, our analyst can use a special Excel add-in named Spreadsheet Professional. It is a toolset that allows you to build, document, test or use your spreadsheet in an efficient and quick manner.
With the aided help and extended tips, I hope that our analyst in picture succeeds in overcoming the major setback that he is going through and pleases his boss as well as his girl.