Text Formatting in Financial Models
If you have read our article on color coding formatting in financial models, you remember that the standard color code for hard coded inputs is blue. While
that is a good formatting rule to follow, the text should preferably be black because using blue makes it difficult to read the document.
The font style is mostly specific to the firm you are working for. Most of the banks use a default font style to make the appearance of their work
consistent and Arial is probably the most common type of font used.
There is no standard font size but the size should be consistent throughout and normally lies somewhere between 10-12.
Borders, Fonts, and Fill Colors:
Usually, borders are included only around the financial statements and supporting schedules, like those for revenue and expense models. Borders should
never be overused doing which makes it difficult to read and interpret the model.
Bottom borders can be included either beneath or above the date rows but a box shouldn’t be used there. In normal cells, you would only apply outside
borders if you have an input cell and you want to change it to the blue/yellow/black border format discussed above.
As mentioned above, 10, 11, or 12 point font sizes are all common, and standard font types include Arial, Calibri, and Helvetica.
You would very rarely want to use any type of fill color to change the background color of cells. Do this only for the titles of all schedules (like those
in a DCF or the WACC calculation), key summary rows and perhaps on any graphs or charts that are created and keep most areas white.
While working on financial models, most things should be kept left aligned and set to ‘general’ horizontal alignment.
Any rows that show supporting calculations, such as revenue growth or gross margins can be idented.
You can center align any important input cells and use center across selection for section headers and titles, where
One important point to keep in mind at this point is that cells in a financial model should be never merged, merging messes up the alignment and also makes
it easy for errors to creep in while copying formulas.
Generally, people prefer to keep all the text left aligned in the cells and all the numbers and calculations right aligned. This is not mandatory but it
makes it easier for some to spot errors and separate text from calculations.
Normal vs. Bold vs. Italics:
Bold text should be used for:
· Important section summaries or titles (Total Revenue, Net Income, Total Assets, etc.).
· Dates at the top of your model (sometimes – varies by model setup).
· Parts of the Assumptions or Inputs section to draw attention to.
· Sometimes, you will use bold for the entire column of the most recent year’s historical financial data in a model.
Percentages and changes overtime are italicized.
Besides these, all the font should be set to normal weight. This is least important of all, that’s been discussed so far but if we are looking at getting
things right, might as well get this out of the way.