Introduction to Financial Modelling
Principles of Excel as a Modelling Tool
Essential Operations and Short-Cuts
Introduction to Excel Functions
Building Models: Common Structures and Best Practice Principles
Planning Models for Decision Support

2.8 Modelling Exercise

Please do the following exercise:

  • Open a new Excel workbook (then use File/Save As to save it under a new name).
  • In a worksheet of the workbook, build the model as shown in column B and C above (column E is for reference, showing the formulas used; you do not need to build that part), and then save the file (using File/Save). When building the model, we recommend the following process (though you can choose to use your own route if you wish):
    • Enter the text and data in rows 2 to 6. Format the data and borders.
    • Enter the text and formulas in rows 8 to 11. Format as shown.
  • Once built, practice performing the tracing of precedents and dependents, as well as using Formulas/Show Formulas. Also check the impact of changing the values of some of the input assumptions.

Note: You will need to model in the following quiz and in the next chapter, so please retain it by saving the file!

Use this model to address questions such as:

  • What is the effect on profit of changing the price (e.g. from 10 to 11)?
  • What would the profit be in a specific case or scenario where several input values are all changed (simultaneously) from the base case (e.g. in a scenario where Price = 9.5, Volume Sold =780, Variable Cost Per Unit =1.30, Fixed Costs =1505?)
  • What is the lowest value of volume sold (expressed as a positive integer) for which the profit is positive (where all other inputs are set at a specific set of values, such as their base case values)?
  • For a particular cell containing calculations (such as any call in the range C8 through C11), which cells would be shown as precedents when Formulas/Trace Precedents is used?

Now please take the quiz!!!

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