Introduction to financial modeling

Financial Modeling in Excel

Nick Edwards

Analyst at Mynd

Expectations

Hands-on experience in a financial model
No need for any financial background!
Prerequisites:
- Data Preparation in Excel
- Data Analysis in Excel

Image of a person looking at financial information

Welcome to the Streit

Newly hired Junior Analyst
Streit is a fictional real estate firm
Real estate investment trusts (REITs) own and operate real estate investments
Use financial modeling to find good investments

Financial modeling

A financial model is a mathematical representation of a real-world financial situation
- Used to make predictions or analyze financial performance
- Historical data and assumptions
- Answer financial questions
- Many different types of financial models

Independent versus dependent

Independent variables derive their value from outside of the model
- They are the inputs of the analysis
Dependent variables derive their value from the model and rely on inputs
- They are the observed output of the analysis

Example: Net Income = Revenue - Expenses

a diagram of a model with inputs going through a model to get an output

Financial model color coding

financial model color coding blank

¹ https://www.wallstreetmojo.com/financial-modeling-colour-formatting/

Financial model color coding

color coding diagram with blue

¹ https://www.wallstreetmojo.com/financial-modeling-colour-formatting/

Financial model color coding

color coding diagram with blue and black

¹ https://www.wallstreetmojo.com/financial-modeling-colour-formatting/

Financial model color coding

color coding diagram with blue, black, and green

¹ https://www.wallstreetmojo.com/financial-modeling-colour-formatting/

Financial model color coding

color coding diagram with blue, black, green and red

¹ https://www.wallstreetmojo.com/financial-modeling-colour-formatting/

Income statements (profit and loss)

example of an income statement

Income statements (profit and loss)

example of an income statement with revenue and expenses outlined in red

Income statements (profit and loss)

income statement with line items and subtotals highlighted for revenue

Income statements (profit and loss)

income statement with line items and subtotals highlighted for revenue

Income statements (profit and loss)

income statement highlighting the net income calculation

Let's practice!

Financial Modeling in Excel

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