A few basic rules in financial modeling (2/3)

Dec, 01, 2015

In this article we will focus on the formating rules you should take care of not only for the readability of your model but also to easily develop your model and allow futur users to understand the architecture of your financial model.


Read the first part of “A few basic rules in financial modeling”

Files must provide a certain amount of useful information.

Don’t forget to fill-in:

  • A date and a serial number
  • Contact information of the creator or the dedicated person to contact in case any user needs help
  • Some explanations about the conventions on cell’s background color, typo and everything regarding the general organization of the workbook.
  • References to external data: hypothesis’ origin, source reports, linked worksheets
  • A user guide (every good financial model is a long-term tool that will be used by several people)
  • If the financial model is complex, an administrator guide is needed to be able to develop the model in the future.

financial model

Column use

Traditionally, periods of time (years, trimesters or months) are represented in columns.

It can be useful to make a background color differences between past years (frozen figure) and forthcoming years (modeled forecast).

You should not insert subtotals in the middle of your periods of time to ease the process of expending your formulas through your tab. Put those subtotals on a separate sheet instead and use SUM, IF formulas to call them out.

On every worksheet, a designated column must match the same period of time.

Respecting those conventions limits the number of mistakes in formulas and eases revision or use of the model by different users.

Read the first part of “A few basic rules in financial modeling”

Learn more about UpSlide, the most complete add-in suite for Microsoft Office

Author: Taylor Edouard