Bastick Liam - Introduction To Financial Modelling

How to Excel at Being a Lazy [That Means Efficient!] Modeller

FIRST EDITION

Dr. Liam Bastick

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Copyright 2018 SumProduct Pty Limited.

Published in 2018 by SumProduct Pty Limited.

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Published in the United States by Holy Macro! Books, PO Box 541731, Merritt Island FL 32953 ISBN 978-1-61547-066-2 (Print) 978-1-61547-152-2 (Digital)

About the Author

Dr. Liam Bastick FCA FCMA CGMA MVP

Starting off as a university lecturer, Liam has over 30 years experience in financial model development / auditing, valuations, M&A, strategy, training and consultancy. He has considerable experience in many different sectors (e.g. banking, energy, media, mining, oil and gas, private equity, transport and utilities and has worked in many countries including Australia, Belgium, Denmark, France, Germany, Hong Kong, Indonesia, Malaysia, New Zealand, Singapore, Switzerland, United States, United Kingdom and Vietnam, with many internationally recognised clients, constructing and reviewing strategic, operational and valuation models for many high profile International Public Offerings (IPOs), Leveraged Buyouts (LBOs) and strategic assignments.

With over 1,000 articles written for the accounting profession, he is a regular contributor to the American Institute of Certified Public Accountants (AICPA), Chartered Accountants Australia and New Zealand (CAANZ), Certified Practising Accountants Australia (CPAA), the Chartered Institute of Management Accountants (CIMA), the Institute of Chartered Accountants in England and Wales (ICAEW), Finance 3.0 and various LinkedIn specialist discussion groups. Liam is a Fellow of the Institute of Chartered Accountants (ICAEW), a Fellow of the Institute of Chartered Management Accountants (CIMA), a Chartered Global Management Accountant and is also a professional mathematician. Since 2012, he has been recognised by Microsoft as a Most Valuable Professional (MVP) in Excel, one of 104 such awardees worldwide (as at the time of writing).

Unfortunately, he follows Derby County and the England cricket team.

Preface

So, I finally managed it: I wrote this book. Over the years, like many of you, I have been frustrated about the content and detail of many texts supposedly on financial modelling. Im a practitioner with 30 years experience and I kept seeing theoretical books that didnt address the sorts of pragmatic issues that occur in reality.

Hence, I got off my backside and decided to do something about it. I have been writing in many accounting journals and on websites for years regarding common issues those working in in finance and forecasting face day in, day out. I decided it was time to go the whole hog and write a simple book on how to get started in financial modelling in such a way that you can easily have financial statements talking to each other and a Balance Sheet balancing readily and easily. Its intended out for those starting on their journey to develop their modelling prowess and for more advanced users who are seeking a simpler way to put financial statements together, especially key practical tips and tricks to avoid the common pitfalls that bedevil the unwary.

I have been lucky enough to be appointed a Most Valuable Professional (MVP) by Microsoft for services to Excel - one of 104 so-recognised experts as at the time of writing. Now I know an ex is a has-been and a spurt is a drip under pressure, but I hope youll see me as a farmer - someone out(-)standing in their field! It takes thousands of mistakes to get good at something. This book is intended to show you how to avoid many of these traps.

Id like to thank those that helped contribute to this book over the years (this has been 10 years in the making). Thanks to Bill Jelen for getting me to actually write it (even if we didnt end up joining forces), Tim Heng for technically editing it and not deleting all my bad puns, Cecile Nguyen and Jonathan Liau for firming up the examples, and most importantly my immediate family, Nancy and little Layla, who have always supported me - even when I have gone many months spreading the word around the globe at the expense of a home life. To that end, I let my nine-year old daughter, Layla Bastick, have the last (fore)word:

This book is a great source of information for people who are hoping to learn more about Excel and financial modelling. Liam Bastick has an amazing talent which helps people who read books like these to have a better understanding of modelling. This book is also inspiring for many of us thinking about becoming an expert in financial modelling or Excel. I am so proud of you daddy.

Liam Bastick, March 2018

www.sumproduct.com

Editors notes

Its entirely possible that I have spent more time than Liam did on this book - partly because hes extremely good at what he does and condensed a lifetime of experience into a few weeks of furious book writing, and partly because Ive spent a few minutes at every bit of humour that hes written, wondering if we would be sued if I left it in. Suffice to say, you dont need a PhD to see how the numbers work out there.

The challenge in writing a book about financial modelling is that the core of any modelling example is in the Excel files themselves. A picture may show a thousand words, but its incredibly hard to convey exactly how a formula or a set of calculations work without seeing the overall context of the model and being able to drill into the formula itself. With that in mind, we have set up a page on our website for further reference, where we will (for as long as our website and the internet as we know it still exists) provide files containing examples that we have used throughout this book, as well as any supplementary materials that we think may be useful: www.sumproduct.com/book-resources.

Although financial modelling has remained relatively consistent over the last few decades, there is always room for improvement, just as it is with this book. As with any text of this nature, there are bound to be typos, images that need improving, Excel features weve recommended that become deprecated, and new tips and ideas that demand to be included in the next edition of this book. Please let us know if you discover any errors, if you have any new ideas, or if you can think of better ways to present and explain the material that we have. We welcome any comments, best received via email at contact@sumproduct.com.