Spreadsheet Modeling in Corporate Finance Review

Average Reviews:

(More customer reviews)Although intended as a supplement for textbooks used in college level business courses, this book is also valuable to working professionals who deal with financial modeling. Because I am a consultant and project manager I'm going to slant this review towards how my peers will benefit from the book. It's value outside of my narrow scope should be apparent.
First, unlike other books that teach spreadsheet modeling, the spreadsheets that come on the CD ROM are not finished products. Instead the author has chosen spreadsheets that use dynamic charts to illustrate concepts in an interactive manner (drag a control to change the parameters and the chart changes - this is a powerful teaching tool in or out of the classroom).
Second, the book needs to be read in sequence because spreadsheets you build in one chapter are the basis for refinements and added complexity in later chapters. This leads to highly complex spreadsheets, such as the model in chapter 16 (Life-Cycle Financial Planning), which incorporates tax parameters (federal and state levels), benefits analysis and other factors.
In all there are 53 spreadsheets presented in this book, and you build them. The author calls this "active learning" (as opposed to passive learning where you are provided templates), and it is effective because you are the one who builds the models and tools while following the book. Note that this book does NOT purport to teach Excel programming, but how to build models using Excel's basic features and functions.
As a consultant and project manager the parts of this book that were immediately useful to me were: Parts I (Time Value of Money), III (Capital Budgeting) and IV (Financial Planning). In particular, project management requires a thorough understanding of time value of money and capital budgeting, and the chapters in these sections should be read by anyone who is assigned as a project manager. Financial planning, especially from the perspective of IT asset management, is another knowledge area in which IT consultants should be well versed.
The other parts of the book (II Valuation and V Options and Corporate Finance) will be more useful to finance professionals and general business managers. There is a collection of supporting material on the author's web site that augment this book, including spreadsheets that can be downloaded. Another plus for the working professional is the book is fast-paced and, dare I say, engrossing.

Click Here to see more reviews about: Spreadsheet Modeling in Corporate Finance

If you build it, you will learn.*Comes as a book and CD-ROM that teaches students how to build financial models in Excel *Provides instructions for building financial models, not templates *Progresses from simple examples to complex real-world applications *Is available is alternative versions that match the notation of most Prentice Hall Corporate Finance textbooks and other popular textbooks *Includes end-of-chapter problems *Has been extensively classroom-tested

Click here for more information about Spreadsheet Modeling in Corporate Finance

Read More...

Financial Modeling Review

Average Reviews:

(More customer reviews)Simon Benninga's 3rd Edition of Financial Modelling with Excel is the single most useful book for finance students and professionals ever published and continues to offer an outstanding reference and textbook for students and practitioners of applied finance.
For further information, please use the "Look Inside" feature and examine the Table of Contents carefully, because I will emphasize selected portions.
It is difficult to overstate how useful and practical and helpful this work is for a wide audience and Financial Modelling is the single finance book I recommend for everyone after they have taken (or read themselves) Introductory Finance.
For those looking for "one-stop-shopping" for models that resemble those of professional financial analysts then there is no better value than Benninga's FM3.
Benninga's FM3 is a coal-face work for those who must make financial decisions using models. There are further specialist texts in topics covered here (credit modelling, portfolio construction, option pricing), but the models in FM3 are the first advanced models applied to loans, bonds, options, and equity portfolios. Master these and then specialized texts are easier to digest.
"Cookbook" metaphors are too strong and do not do this work justice, for Financial Modelling 3rd (FM3) is not a mere collection of recipes but rather topical introduction, explanation, and then direct technique.
If we can make a comparison with a "cookbook" then FM3 falls somewhere between "The Joy of Cooking" and "Mastering the Art of French Cooking." "Joy" combines chapters on technique, ingredients, and tools with dense pages of endless recipes, whereas "Mastering" emphasises technique and a few well-selected recipes.
The welcome new chapters cover bank valuation, the Black-Litterman approach to portfolio optimization, and Monte Carlo methods and applications to option pricing, and the previous 2nd edition's small chapter on using array functions and formulas has been expanded. The chapter on data downloads from YAHOO is also welcome, especially for those on a budget.
There is a single significant flaw in the work, which is excusable and redeemable. Far too often the discounting in the chapters is done over a flat interest rate curve. While the term structure of interest rates is covered, and historical term structures and parallel shifts and steepening and flattening is covered in isolation in a thorough chapter and with wonderful data files, the necessity and explicit connection of discounting from an appropriate yield curve is left implied and only mentioned in a few exercises. I would have preferred a "round up" chapter where each of the subjects treated (bond discounting, portfolio expected returns, options, etc.) under a yield curve with advanced models. Sure BLOOMBERG and REUTERS have these sort of things (often incorrectly) programmed, but students need to learn explicitly about them and do the exercise themselves to comprehend the importance of curve discounting.
The CD attached in the back of the book is alone worth the price, with over two score of models that are practical and adaptable for students and professionals alike. The files are stored and separated according to chapters and subject matter. Each file has logical progression of the concepts advanced in the book, and each separate sheet either stands alone or appropriately links to data and models on other sheets, so editing for your own purposes is a breeze.
For those who want to train themselves in Finance (not "personal finance") then I suggest reading Copeland, Weston, & Shastri's Financial Theory and Corporate Policy (4th Edition) and Brealey, Myers, and Marcus's "Corporate Finance" and "Investments" followed by working through FM3. Such a course would give any self-disciplined person the equivalent of a Masters of Science in Finance.
Full disclosure: I am thanked in the "Acknowledgements" for providing a few helpful comments on the second edition.

Click Here to see more reviews about: Financial Modeling

"The new edition of Simon Begginga's Financial Modeling is acomprehensive and effective learning-by-doing tool in motivating users and makingeasily accessible the concepts of modern corporate finance, investments, andderivatives. In the real world of finance, its clear step-by-step approach empowersthe practitioner to search the internet for financial data, build programs toanalyze them, and make sound financial decisions. I strongly recommend it to thefinance student and practitioner alike."--George Constantinides, Leo MelamedProfessor of Finance, The University of Chicago Graduate School ofBusiness (George M. Constantinides )

Get 37% OFF

Click here for more information about Financial Modeling

Read More...