BlogModeling Fundamentals

Financial Modelling Handbook

Jan 24, 2024 · Learn how to build financial models the right way

Taylor Davidson

CEO / Founder

My quick review of the Financial Modelling Handbook (buy here): technical, practical, accessible, valuable, immediately applicable. People with a familiarity with financial modeling but looking to improve their skills will benefit from the handbook, which combines a philosophy to financial modeling with highly practical demonstrations and examples to teach you how to apply that philosophy to build financial models that can be understood and used for small and big projects.

Written by Kenny Whitelaw-Jones, the handbook starts with explaining why and how to use financial models, to set the stage for applying those insights to a practical example of a project finance financial model. The handbook provides detailed instructions on how to build common components of financial models, and along the way teaches the rationale behind many modeling conventions and how to apply them, such as why flags are valuable, typical sign conventions, standard ways for building corkscrews, how to structure inputs and calculations, how to build scenarios, how to create variance analyses, and many other components critical to building financial models, with examples in the book and downloadable practice models to use. The case study is particularly valuable: I picked up a number of ideas on balance sheet modeling, debt interest and principal payments, and tax calculations that I applied in my models. The screenshots in the book are useful to explain the structure, formatting, and rationale, and the accompanying downloadable Excel files provide concrete examples for you to inspect and use.

I would recommend it to anyone looking to become a better financial modeller, whether you taught yourself or took trainings to learn financial modelling, because the handbook does such a good job of explaining why we do things and then showing you how to do it. I taught myself how to build models from thousands of hours of iterating on models, but guides like the Financial Modeling Handbook can help you shorten that learning curve.

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