Financial Modelling in Practice:
A Concise Guide for Intermediate and Advanced Level
DR. MICHAEL REES
Based on the author's extensive experience of building models in business and finance, and of training others how to do so, this book starts with a review of Excel functions that are generally most relevant for building intermediate and advanced level models (such as Lookup functions, database and statistical functions and so on). It then discusses the principles involved in designing, structuring and building relevant, accurate and readily understandable models (including the use of sensitivity analysis techniques) before covering key application areas, such as the modelling of financial statements, of cash flow valuation, risk analysis, options and real options. Finally, the topic of financial modelling using VBA is treated. Practical examples are used throughout and model examples are included in the attached CD–ROM.
Aimed at intermediate and advanced level modellers in Excel who wish to extend and consolidate their knowledge, this book is focused, practical, and application–driven, facilitating knowledge to build or audit a much wider range of financial models. Published by Wiley. HC, 296pp.
“An excellent book which presents advanced financial modelling tools and simulations, and applies them to modern aspects of financial management. As a renowned expert in modelling, Michael Rees develops efficient techniques for simulation and sensitivity analysis within an Excel and Excel add–on framework using many useful and transparent applications in the context of company valuation, derivative business and risk management, enabling the reader to develop good models themselves. A unique book which is highly instructive and motivating.”
“Dr. Michael Rees’s book fills an important gap in the literature on how to model financial data. It not only provides a whole host of useful suggestions on how to design, structure, build and analyse models; including tips on how use some of the more advanced functionality in Excel, but also in a clear and concise way explains how to include uncertainty in to these models. During the last few years many business’s environment have changed, creating the need to explicitly include uncertainty into their decision making rather than hide behind simple (and often flawed) assumptions of what the future may hold. Mike clearly understands the importance of this area and includes several sections which provide an excellent introduction to anyone starting to apply these types of techniques in their financial models for the first time. It is the combination of best practice modelling techniques, plenty of examples and the basics of some of the more advanced approaches that make this book a useful addition to anyone building financial models.”
“A well structured reference. If you are unclear how best to approach a modelling task or you are ready to reconsider some of your modelling habits, this is a useful bag of tricks and thoughts which can greatly simplify your task.”
“Michael Rees has written a financial modelling book that is exceptional in its clarity, balance of theory and practice, and its abundance of invaluable examples. Comprehensive and application–driven in its topical coverage, it is one of the very few books that address the modelling process itself. Michael Rees enables even the desperate readers to design, structure and build models appropriate for their situation and provides them with a sound and practical foundation to bring financial modelling to life.”
“With this outstanding book the reader gets a comprehensive guideline on how to build financial models by showing a path from theoretical approaches to more realistic models. I have never seen such a good explanation of the basic aspects of financial modelling and the presentation of risk modelling including the application of statistical functions. Mike combines visual explanations with mathematical functions and statements where necessary. Supported with a lot of examples this gives the reader a quick understanding of the different topics. The logical development from risk modelling to the analysis of real options is extremely helpful and to my knowledge has never been published in such a form. From my daily practise I would recommend this unique book to every professional or student who is engaged in business modelling and especially interested in risk management.”
“Michael Rees has hit the nail on the head. In Financial Modelling in Practice, he has addressed many common problems business professionals face in accurately representing their real–life situations as Excel spreadsheets. Modelling is crucial for informed decision–making, as is taking uncertainty and risk into account. Michael Rees addresses these needs in a practical, easily understood way that is both robust and accessible.”
About the Author
Michael has 20 years’ of business and finance experience, including roles such as Principal (Partner) at the strategy consultants Mercer Management Consulting (now Oliver Wyman) and Vice-President of Equity Research at J.P. Morgan. He has worked independently for 8 years, for 6 of which he was retained by Palisade Corporation to act as their Director of Training and Consulting. He is the author of Financial Modelling in Practice: A Concise Guide for intermediate and Advanced Level, John Wiley & Sons, 2008).
His academic credentials include a Doctorate in Mathematical Modelling and Numerical Algorithms, and a B.A. with First Class Honours in Mathematics, both from Oxford University. He has an MBA with Distinction from INSEAD in France, as well as holding the Wilmott Certificate of Quantitative Finance, where he graduated top of the course for class work and also received the Wilmott Award for the highest final exam mark. Michael is based in the UK and speaks fluent French and German.