Author Archive

Dressing Financial Statements – What Motivated Mr. Bean to Defraud Latte?

Published on Dec 11, 2012 in Financial Modeling

Did you know What Happened at Last Coffee Day?
Mr. Bean “dressed up” the financial statements and was caught in the fraud. But he was the CEO of Latte! So why did he commit fraud in his own company??

Any Guess?

Take a cappuccino and I will give you a hint – How was Mr. Bean’s Bonus to be decided?

Read on to know more…

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Financial Ratios – Cappuccino or Latte?

Published on Nov 21, 2012 in Financial Modeling
Financial Ratios – Cappuccino or Latte?

A Quick Question for you!
Don the hat of a financial wiz today. What I have for you are the financials of two companies: Cappuccino and Latte – Two dot com companies (Sometimes they also make revenues ;-))

Which is better – Cappuccino or Latte? ( Hint: It’s a trick question! 😉 )

It may seem obvious that Latte is performing better (Higher the revenue, the better the performance!). Sometimes a single source of data does not speak the full story!

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Creating Cash Flow Statement by Indirect Method – II

Published on Apr 17, 2012 in Financial Modeling

So what’s the cash with Facebook? Last time, we announced the launch of a new module on getting the cash flow statement in our financial modelling course and also discussed the procedure to create the cash flow statement. I had shared with you the template for financial statements for Facebook. I had asked you to implement the steps and create the cash flow model for Facebook!

We know that the devil is in the details. Last time we discussed the process and in this post, we would implement the cash flow statement for Facebook using the indirect method.

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Creating Cash Flow Statement by Indirect Method – I

Published on Apr 11, 2012 in Financial Modeling
Creating Cash Flow Statement by Indirect Method – I

If there was a challenge in any Finance 101 course at any B School, I think Creating the Cash Flow Statement would score the max. When I was pursuing my MBA, the biggest enigma for me was to go from the Balance Sheet and Income Statement to the Cash Flow statement via the indirect route. I could never get it right!

There were two challenges, the bigger was obviously unclear concepts plus I didn’t know how to play with Excel! I have worked hard on both and let me show you, how they can be used to get the right cash flow statement in no time!

Actually the concept is simple and excel makes it run on steroids!

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Reporting Scenarios using Offset

Published on Feb 14, 2012 in Excel Howtos, Financial Modeling, Learn Excel
Reporting Scenarios using Offset

Project Managers often report financial numbers to the management. In a dynamic world, these numbers are usually based on a lot of factors that may or may not be under your control. So the top management demands that the numbers be reported as per different economic scenarios – Optimistic, Normal or Pessimistic. It is important […]

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Shortcut for Long Models

Published on Dec 14, 2011 in Financial Modeling

Have you created models which run into 20 – 30 years? You might have noticed that navigating to the last year (the last column) is probably the most boring part (and also the most time consuming part). Excel does provide you a shortcut (Ctrl + end), but that hardly works! It’s been a while since […]

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Commercial Aspects of Project Management

Published on Oct 14, 2011 in Project Management
Commercial Aspects of Project Management

In 2005, fresh out of MBA School, I was put on managing an e-business transformation strategy project. It was then that realized that project management was a full time job (I always wondered before that why PMs were even paid a dime!). We created huge Project Management reports for the client, where were tracked and […]

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Offset() function to Calculate IRR for Dynamic Range

Published on Oct 4, 2011 in Financial Modeling

Offset() function to Calculate IRR for Dynamic Range When you start the project can you be sure, for how long will you operate it? A VC gives you funds to buy a commercial project. You are to operate the project for some time and then sell it off! Can you tell me today, when you […]

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Simplicity is a Virtue – BASE Rule

Published on Aug 9, 2011 in Financial Modeling
Simplicity is a Virtue – BASE Rule

On a cup of green tea with a friend I grabbed the golden rule of accounting. It is simple (You can easily miss if it came your way!) and can be applied to almost all the accounts (Depreciation, Gross Block, Cash, Equity, Debt) – You name it, and you have to use it! So concentrate […]

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Scenario Analysis for the Project Valuation [Financial Modeling]

Published on Jul 26, 2011 in Financial Modeling
Scenario Analysis for the Project Valuation [Financial Modeling]

Few months ago, we learned how to create a project valuation model in Excel as part of our series on Financial Modeling in Excel.

My Project Evaluation Model had a limitation!! In one of the personal comments that I received, the reader pointed out an important problem!

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Accumulated Depreciation using Mixed References

Published on Jul 19, 2011 in Excel Howtos, Financial Modeling
Accumulated Depreciation using Mixed References

Last time we had discussed the use of SumProduct() to ease your life for calculation of consolidated revenues and depreciation. This time we would be using the sum function! Yes you heard it right – The Sum function.

But we would use the Sum function with a small trick! We would use it to calculate running cumulative sum! And believe me, you would need this function so many times – to calculate accumulated depreciation, cumulative debt, Profits to Retained Earnings and almost all the accounts that would consolidate into the balance sheet.

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Sumproduct function to Consolidate Revenues?

Published on Jul 12, 2011 in Excel Howtos, Financial Modeling

Chandoo.org is all about simplifying life using Excel. When I first started visiting the site, I was amazed at the amount of information on the site, which made your life easier. My next few posts would be about excel functions which can make your life for Financial Modeling easier! These are simple examples that you […]

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NPV() function to calculate Present Value

Published on Jul 5, 2011 in Financial Modeling, Learn Excel
NPV() function to calculate Present Value

Today, let us learn how to use NPV() function in Excel & create a simple financial model.

If you are dealing with cash and valuations, you are bound to have come across the NPV function. If you don’t know the assumptions behind the same, I bet it could cost you your job!

Let’s take a simple project – You buy a MSFT stock for USD 100. You receive a dividend of USD 10 in the first year, USD 20 in the second year, USD 40 in the third year and then you sell it out for USD 140. If you could have alternatively put this money in bank at 10% interest rate, have you gained anything?

How do you model this in excel? In this tutorial we understand how you can use NPV to do this analysis and what kind of pitfalls you can land into!!

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Mod() function in excel to Implement Escalation Frequency [Financial Modeling Tutorials]

Published on May 24, 2011 in Financial Modeling, Learn Excel
Mod() function in excel to Implement Escalation Frequency [Financial Modeling Tutorials]

You take an apartment on rent at $1000 per month and the owner puts an escalation clause saying 10% increment each 3 years. How do you model this in excel? In this tutorial we understand how escalations at certain frequency can be implemented using the mod function in excel. What is the mod() function Simply […]

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