Understanding Financial Models, Excel

Running head: UNDERSTANDING FINANCIAL MODELS, EXCEL ASSIGNMENT 2

Understanding Financial Models, Excel Assignment 2

Delmar W Griggs

BUS 510.91 Financial Modeling – Post University

Understanding Financial Models, Excel Assignment 2

Spreadsheets are worksheets and thus an Excel financial statement is just one of many spreadsheet possibilities. This leads us into how Wall Street has always loved its toys. While there is very little missed by the seasoned analyst on either the buy-side or sell-side it is not all done on a Bloomberg terminal or from the Factset database. Surprisingly these expensive subscriptions and analytics programs not even used at all by some leaving a huge amount of the work that analysts and managers do is done the same way that you have on your computer.

With today’s technology just a little effort and you too can create a variety of financial and analytical models, and investing the additional time and energy to learn how to “explain the purpose and understand the format of the firm’s three basis financial statements: the income statement, the balance sheet, and the statement of cash flows” (Mayes, 2012, p. 43) will prove valuable time and again.

Excel 2010 Download “Chapter 2 Problem 3.xlsx”

Three Basic Financial Statements:

Income Statement: A financial statement that measures a company's financial performance over a specific accounting period. Financial performance is assessed by giving a summary of how the business incurs its revenues and expenses through both operating and non-operating activities. It also shows the net profit or loss incurred over a specific accounting period, typically over a fiscal quarter or year. Also known as the "profit and loss statement" or "statement of revenue and expense" (Investopedia, 2012).

Balance Sheet: A financial statement that summarizes a company's assets, liabilities and shareholders' equity at a specific point in time. These three balance sheet segments give...