PROJECT REPORT

ON
“FINANCIAL MODELLING - BCOM 308”
SUBMITTED IN PARTIAL FULFILLMENT FOR THE
AWARD OF THE DEGREE OF
BACHELOR OF COMMERCE (H)
2019-2022
UNDER THE GUIDANCE OF
DR. SWATI NARULA
FACULTY, VIPS
SUBMITTED BY:
Name: DHRUV KAUSHIK
Enrolment No. 13717788819
4thSEMESTER, B.COM (H)

Vivekananda School of Business Studies

Vivekananda Institute of Professional studies
AU Block (Outer Ring Road), Pitampura
Delhi-110034
 INDEX
S No. PARTICULARS Page
No.
i. STUDENT UNDERTAKING, CERTIFICATE AND 5-7
ACKNOWLEDGEMENT
1. EXCEL INTRODUCTION AND COMMANDS 8-13
2. BASIC EXCEL FUNCTIONS 14-22
 MATHAMATICAL FUNCTIONS
 LOGICAL FUNCTIONS
 DATE FUNCTIONS
 TEXT FUNCTIONS
 STATISTICAL FUNCTIONS
3. CHARTS & GRAPHS IN EXCEL 23-24
4. AUTO FORMAT &CONDITIONAL FORMATTING 25-27
5. FILTER-BASIC AND ADVANCED 28-30
6. SORTING THE DATA 31
7. UNDERSTANDING MACROS 32-33
8. ADVANCED EXCEL 34-43
 DATA TABLES
 GOAL SEEK
 SCENARIO ANALYSIS
 PIVOT TABLE & CHART
 PROBLEM SOLVER
9. INTRODUCTION TO FINANCIAL MODELING 44-47
  MEANING OF FINANCIAL MODELLING AND
FINANCIAL MODEL
 TYPES OF FINANCIAL MODEL
 FEATURES OF A GOOD MODEL
10. ADVANCED EXCEL AS A TOOL IN FINANCIAL 48-55
MODELING:
 VLOOKUP
 HLOOKUP
 DATA VALIDATION
 DEPRECIATION USING SLN AND DB
11. ENTERING HISTORICAL DATA 56-63
12. FORECASTING FINANCIAL STATEMENTS 64-70
13. RATIO ANALYSIS 71-77
14. VARIOUS APPROACHES TO VALUATION 78-79
15. SENSITIVITY ANALYSIS 80-82
16. TIME VALUE OF MONEY 83-95
 PMT
 PV
 FV
 RATE
 PPMT & IPMT
17. CAPITAL BUDGETING TECHNIQUES 96-104
 NPV
 XNPV
 PI
  IRR
 XIRR
 MIRR
18. INTERNATIONAL CASH FLOWS 105
19. DIVIDEND DISCOUNT MODELS 106-111
20. MARKET BASED METHODS 112-116
 EV/EBITDA
 EV/SALES
21. ANNEXURE 117-130

STUDENT UNDERTAKING
This is to certify that I have completed the Project titled
“FINANCIAL MODELLING AND SPREADSHEETS” under the
guidance of “DR. SWATI NARULA” in partial fulfilment of the
requirement for the award of degree of Bachelor of Commerce (H) at
Vivekananda Institute of Professional Studies, Vivekananda School of
Business Studies, New Delhi. This is an original piece of work and has
not been submitted elsewhere.

STUDENT SIGNATURE:

STUDENT NAME: DHRUV KAUSHIK

 CERTIFICATE

This is to certify that the Project titled “FINANCIAL

MODELLING AND SPREADSHEETS” is an academic work done
by “DHRUV KAUSHIK” submitted in the partial fulfilment of the
requirement for the award of the Degree of Course from
Vivekananda Institute of Professional Studies.  It has been
completed under the guidance of DR. SWATI NARULA (Faculty
Guide). The authenticity of the project work will be examined by the
viva examiner which includes data verification, authenticity of
information etc. and it may be rejected due to non-fulfilment of
quality standards set by the Institute.

Signature of the Faculty Guide

 ACKNOWLEDGEMENT

Every work involves efforts and inputs of various kinds and people. I
am thankful to all those people who have been helpful enough to me
to the extent of their being instrumental in the completion and
accomplishment of the project entitled “FINANCIAL
MODELLING AND SPREADSHEETS”. I am very thankful to DR.
SWATI NARULA for her timely guidance, supervision &
encouragement that have helped me to get this golden opportunity
and who provided me their expert advice, inspiration & moral
support. I thank her for contributing and guiding me for the same,
the valuable suggestions & guidance provided by her really helped
me in successful accomplishment of my project.
Last but not the least I would like to express my heartiest gratitude
to my family members and friends. Their motivation, love and moral
support boosted my confidence to work sincerely and in an effective
way. Thank you for being my guide and motivator throughout this
difficult path.

D HR UV K A US HI K
 BASIC OF EXCEL AND FINANCIAL MODELLING
Financial Modelling is the process of creating a summary of a company's expenses and
earnings in the form of a spreadsheet that can be used to calculate the impact of a future event
or decision.

A financial model has many uses for company executives. Financial analysts most often use
it to analyse and anticipate how a company's stock performance might be affected by future
events or executive decisions.

Financial modelling is a representation in numbers of some or all aspects of a company's

operations.

Such models are intended to be used as decision-making tools. Company executives might
use them to estimate the costs and project the profits of a proposed new project. Financial
analysts use them to anticipate the impact of an economic policy change or any other event
on a company's stock.

Financial models are used to estimate the valuation of a business or to compare businesses to
their peers in the industry. They also are used in strategic planning to test various scenarios,
calculate the cost of new projects, decide on budgets, and allocate corporate resources.

The term “Financial Modelling” maybe applied to a multitude of tasks, for simple sheet to
add up expenses to sophisticated risk modelling for projects.

Financial aspects would cover-

1. Developing specialist programs which answer specific business problems.
Eg- cash flow cover and variability
2. Analysing and processing data.
3. Modelling the future or a considered view of the future i.e Forecasting.
4. Processing data quickly and accurately into management information.
5. Testing assumption in a safe environment.
Eg- project scenario
6. Supporting management decision making through a structured approach.
7. Understanding more precisely the variables and rules in a problem.
8. Learning more about process and behaviour.
9. Discovering the key variables and their sensitivity.

The process by which a form constructs the financial representation of some or all aspects of
firm or given security, the model is usually characterised by performing calculation ad makes
recommendation based on that information. The model may also summarise particular invent
for the end user and provide direction regarding possible actions or alternatives. In a nutshell,
the financial modelling involves building financial models sometimes from scratch or
sometimes maintaining or updating existing financial models. Therefore, financial modelling
is a skill that can be learned only by lessons and practice.
Need for Financial Modelling
1. Launching a new product.
2. Integrating a potential acquisition.
3. Refinancing debt.
4. Presentation or engagement of financial models will depend on purpose and target
audience.
5. Financial Modeling requires preparation of complete financial statements over a
defined period, or it may require limited information over a defined period.
6. Complete Financial Statements are challenging and time-consuming to prepare, but at
the same time also most instructive to users. For example, Balance Sheet measures
future liquidity and Leverage. Income Statement estimates future operating results.
Statement of Cash Flows outlines future cash need for growth (investments and
borrowings) and Return to Investors collectively completes financial statements and
can help in measuring return on investments and potential risks related to it.

USERS OF FINANCIAL MODELLING

There are four main groups of users that use financial models.
1. Business owners and entrepreneurs
2. Finance and Accounting professionals
3. Financial Modelers and Consultants
4. Individuals for personal finance

SHORTCUT KEYS
= Start a formula
Home Move to the beginning of the line
Tab Move to the cell to the right
Backspace Delete cell and get inside
Arrow keys Move to new cells
Esc Cancel a cell entry
F2 Edit cells
F4 Repeat last action
F9 Recalculate workbook
F12 Save file as
F5 + Enter Go back to original cell
Ctrl + A Select all
Ctrl + B Bold
Ctrl + C Copy
Ctrl + D Copies the top cell down to range
Ctrl + G Go to
Ctrl + N New workbook
Ctrl + O Open file
Ctrl + P Print
Ctrl + R Copy formula right to fill selection
Ctrl + S Save file
Ctrl + U Underline
Ctrl + V Paste
Ctrl + W Close worksheet
Ctrl + X Cut
Ctrl + Y Redo
Ctrl + Z Undo last action
Ctrl + 0 Hide selected column
Ctrl + 1 Format cell
Ctrl + 9 Hide selected row
Ctrl + F1 To display and hide ribbon
Ctrl + F3 Name cell
Ctrl + Shift + 1 Autoformat number style
Ctrl + ; Insert current date
Ctrl + - Delete selected cell
Ctrl + ‘ Edit formula
Ctrl + ` Copy formula from above cell
Ctrl + ~ Show all formulas/ values used
Ctrl + [ Highlight precedent cells
Ctrl + ] Highlight dependent cells
Ctrl + Arrow keys Got to end of continuous range
Ctrl + Down arrow Display drop-down list
Ctrl + Spacebar Select column
Ctrl + Page-up Move to next worksheet tab
Ctrl + Page-down Move to previous worksheet tab
Ctrl + Home Move to cell A1
Ctrl + Tab Switch workbooks
Shift + F11 Insert worksheet
Shift + Spacebar Select row
Shift + Arrow keys Select a cell range
Shift + Enter Move to cell above
Shift + Tab Move to the cell to the left
Alt + F4 Close program
Alt + Tab Switch program
Alt + Enter Start a new line in the same cell
Alt + Down arrow Display a drop-down list
Alt + = Auto sum adjacent cells

BASIC EXCEL FUNCTIONS

1. SUM
The SUM function is used to sum up a series of numbers. It can be used to add
individual cells, by separating them with commas, and you can also specify a
range of cells.

The syntax of SUM function is-

=SUM(number1, [number2], [number3]…)

Number1- The first item to sum

Number2- [optional] The second item to sum
Number3- [optional] The third item to sum

2. AVERAGE
 The AVERAGE function calculates the average, or mean of the numbers in the
list. Average is a very useful function in certain situations .

The syntax of the AVERAGE function is-

=AVERAGE(number1, [number2], …)

Number1- A number of cell reference that refers to numeric values

Number2- [optional] A number of cell reference that refers to
numeric values

3. COUNT

The excel COUNT function returns the count of values that are numbers, generally
cells that contain numbers. Values can be supplied as constants, cell references, or
range.

The syntax of COUNT function is-

=COUNT(value1, [value2], …)

Value1- an item, cell reference, or range

Value2- [optional] An item, cell reference, or range
4. COUNTA:
The COUNTA function counts cells containing any type of information, including
error values and empty text ("").

5. COUNTIF
COUNTIF is a function to count cells that meet a single criteria. COUNTIF can be
used to count cells with dates, numbers, and text that match specific criteria.

The syntax of COUNTIF function is-

=COUNTIF(range, cirteria)

Range- The range of cells to count

 Criteria- The criteria that controls which cells should be counted

6. COUNTBLANK:
The Excel COUNTBLANK function returns a count of empty cells in a range.

7. AVERAGE IF
The excel AVERAGEIF function computes the average of the numbers in a range
that meet the supplied criteria.

The syntax of AVERAGEIF is-

=AVERAGEIF(range, criteria, [average_range])

Range- One or more cells, including numbers or names, arrays, or

 reference
Criteria- A number, expression, cell reference, or text
Average_range- [optional] The cells to average. When omitted, range
is used.

8. CONCATENATE

The CONCATENATE function allows the user to join multiple cells and inserting
custom values. 

The syntax of CONCATENATE function is-

=CONCATENATE(text1, [text2], [text3],…)

Text1- The first text value to join together

Text2- The second text value to join together
Text3- [optional] The third text value to join together

9. MAX FUNCTION
 MEANING: The Microsoft Excel MAX function returns the largest value from the
numbers provided. ... It can be used as a worksheet function (WS) in Excel. As a
worksheet function, the MAX function can be entered as part of a formula in a cell of
a worksheet.
 SYNTAX: =MAX(number1, number2,…)

10. MIN FUNCTION

 MEANING: The Microsoft Excel MIN function returns the smallest value from the
numbers provided. The MIN function is a built-in function in Excel that is categorized
as a Statistical Function. It can be used as a worksheet function (WS) in Excel.
 SYNTAX: =MIN(number1, number2…)

CONDITIONAL FORMATTING
Conditional formatting is a feature in many spreadsheet applications that allows you to
apply specific formatting to cells that meet certain criteria. It is most often used as color-
based formatting to highlight, emphasize, or differentiate among data and information stored
in a spreadsheet.

To create a conditional formatting rule:

1. Select the desired cells for the conditional formatting rule.
2. From the Home tab, click the Conditional Formatting command. A drop-
down menu will appear.
3. Hover the mouse over the desired conditional formatting type, then select
the desired rule from the menu that appears.

4. A dialog box will appear. Enter the desired value(s) into the blank field.

5. Select a formatting style from the drop-down menu.

6. The conditional formatting will be applied to the selected cells. 

 HIGHLIGHT CELL RULES:

The Excel Conditional Formatting Highlight Cells Rules allow you to apply formatting to
highlight cells that satisfy one or more specific conditions.

These conditions can relate to numeric values (e.g. greater than, between), dates (e.g. a date
occurring...) or text values (e.g. text containing...). We can also use the Highlight Cells rules
to highlight cells containing duplicate values.
 TOP/BOTTOM RULES:

The Excel Conditional Formatting Top/Bottom Rules allow you to apply formatting to cells
that satisfy a statistical condition in relation to other cells in the range (e.g. above average,
within top 10%, etc.).
 DATA BARS:

Data bars insert a bar chart inside excel, and this helps to visualize the values of the
cells. The larger value will have a large bar line, and the lesser value will have a small
bar line. 
 COLOR SCALES:

Color Scales in Excel make it very easy to visualize values in a range of cells. The

shade of the color represents the value in the cell.
 ICON SETS:

Icon Sets in Excel make it very easy to visualize values in a range of cells. Each icon
represents a range of values.
HLOOK UP
HLOOKUP in Excel stands for ‘Horizontal Lookup’. It is a function that makes Excel
search for a certain value in a row (the so called ‘table array’), in order to return a
value from a different row in the same column.
A HLOOKUP function in Excel exists of 4 components:
1. The value you want to look up;
2. The range in which you want to find the value and the return value;
3. The number of the row within your defined range, that contains the return value;
4. 0 or FALSE for an exact match with the value your are looking for; 1 or TRUE for an
approximate match.

Syntax: HLOOKUP([value], [range], [row number], [false or true])

VLOOKUP

VLOOKUP is an excel function to lookup and retrieve data from a specific column in
table. VLOOKUP supports approximate and exact matching, and wildcards(*?) for
partial matches. The V stands for vertical. Lookup values must appear in the first
column of the table, with lookup columns to the right.

The syntax of VLOOKUP function is-

=VLOOKUP(value, table, col_idex, [range_lookup])

Value- The value to look for in the first column of a table

Table- The table from which to retrieve a value
Col_index- The column in the table from which to retrieve a value
Range_lookup- [optional] TRUE= approximate match (default)
FALSE= exact match
 Advance Excel Functions
Pivot Tables
 Pivot tables are one of Excel's most powerful features. A pivot table allows you to extract
the significance from a large, detailed data set.
Our data set consists of 213 records and 6 fields. Order ID, Product, Category, Amount, Date
and Country.

Insert a Pivot Table

To insert a pivot table, execute the following steps.
1. Click any single cell inside the data set.
2. On the Insert tab, in the Tables group, click PivotTable.

The following dialog box appears. Excel automatically selects the data for you. The default
location for a new pivot table is New Worksheet.
3. Click OK.
Drag fields
The PivotTable Fields pane appears. To get the total amount exported of each product, drag
the following fields to the different areas.
1. Product field to the Rows area.
2. Amount field to the Values area.
3. Country field to the Filters area.

Below you can find the pivot table. Bananas are our main export product. That's how easy
pivot tables can be!
To get Banana at the top of the list, sort the pivot table.
1. Click any cell inside the Sum of Amount column.
2. Right click and click on Sort, Sort Largest to Smallest.

Result.
Filter
Because we added the Country field to the Filters area, we can filter this pivot table by
Country. For example, which products do we export the most to France?
1. Click the filter drop-down and select France.
Result. Apples are our main export product to France.

Note: you can use the standard filter (triangle next to Row Labels) to only show the amounts
of specific products.
Change Summary Calculation
By default, Excel summarizes your data by either summing or counting the items. To change
the type of calculation that you want to use, execute the following steps.
1. Click any cell inside the Sum of Amount column.
2. Right click and click on Value Field Settings.
3. Choose the type of calculation you want to use. For example, click Count.

4. Click OK.
Result. 16 out of the 28 orders to France were 'Apple' orders.
Two-dimensional Pivot Table
If you drag a field to the Rows area and Columns area, you can create a two-dimensional
pivot table. First, insert a pivot table. Next, to get the total amount exported to each country,
of each product, drag the following fields to the different areas.
1. Country field to the Rows area.
2. Product field to the Columns area.
3. Amount field to the Values area.
4. Category field to the Filters area.

Below you can find the two-dimensional pivot table.

Pivot Chart
A pivot chart is the visual representation of a pivot table in Excel. Pivot charts and pivot
tables are connected with each other.
Below you can find a two-dimensional pivot table. Go back to Pivot Tables to learn how to
create this pivot table.

Insert Pivot Chart

To insert a pivot chart, execute the following steps.
1. Click any cell inside the pivot table.
2. On the Analyse tab, in the Tools group, click PivotChart.

The Insert Chart dialog box appears.

3. Click OK.
Below you can find the pivot chart. This pivot chart will amaze and impress your boss.
Note: any changes you make to the pivot chart are immediately reflected in the pivot table
and vice versa.
Filter Pivot Chart
To filter this pivot chart, execute the following steps.
1. Use the standard filters (triangles next to Product and Country). For example, use the
Country filter to only show the total amount of each product exported to the United States.

2. Remove the Country filter.

3. Because we added the Category field to the Filters area, we can filter this pivot chart (and
pivot table) by Category. For example, use the Category filter to only show the vegetables
exported to each country.
Change Pivot Chart Type
You can change to a different type of pivot chart at any time.
1. Select the chart.
2. On the Design tab, in the Type group, click Change Chart Type.

3. Choose Pie.

4. Click OK.
  What If Analysis
What-If Analysis is the process of changing the values in cells to see how those changes will
affect the outcome of formulas on the worksheet. Three kinds of What-If Analysis tools
come with Excel: Scenarios, Goal Seek, and Data Tables. Scenarios and Data tables take sets
of input values and determine possible results.

Data Tables
You can create a data table to quickly try out different values for formulas. You can create a
one variable data table or a two variable data table.

Step 1.

Step 2.

Step 3.

Step 4.

Step 5.
Goal Seek
Goal Seek is a built-in Excel tool that allows you to see how one data item in a formula
impact another. You might look at these as “cause and effect” scenarios. It’s useful to answer
“what if” type questions because you can adjust one cell entry to see the result. The tool is
often used in finance, sales, and forecasting scenarios, but there are other uses.
Question - Goal is monthly payment of 1800

Step 1. On the Data tab, in the Forecast group, click What-If Analysis.

Step 2. Click Goal Seek. The Goal Seek dialog box appears.

Step 3. Select cell B5

Step 4. Click in the 'To value' box and type -1500.

Step 5. Click in the 'By changing cell' box and select cell $B$1.

Step 6. Click OK.

Scenario Manager
The Scenario Manager is a great, but often overlooked What-If Analysis feature of Excel that
will let you swap multiple sets of data in a worksheet and even compare them side-by-side.
This technique can help you decide between multiple courses of action or what the
implications are among several possibilities.

Step1On the Data tab, in the Forecast group, click What-If Analysis.

Step 2. Click Scenario Manager.The Scenario Manager Dialog box appears.

Step3. Add a scenario by clicking on Add.

Step 4. Type a name, select cell/cell range for the Changing cells and click on OK.

Step 5. Enter the corresponding value and click on OK again.

Scenario Summary

To easily compare the results of more than one scenarios, execute the following step.

Step 6 Click the Summary button in the Scenario Manager.

Solver
 Solver is a Microsoft Excel add-in program you can use for what-if analysis. Use Solver
to find an optimal (maximum or minimum) value for a formula in one cell — called the
objective cell — subject to constraints, or limits, on the values of other formula cells on a
worksheet. Solver works with a group of cells, called decision variables or simply
variable cells that are used in computing the formulas in the objective and constraint
cells. Solver adjusts the values in the decision variable cells to satisfy the limits on
constraint cells and produce the result you want for the objective cell.
1. On the Data tab, in the Analysis group, click Solver. ...
2. In the Set Objective box, enter a cell reference or name for the
objective cell.
3. Do one of the following: ...

o If you want the value of the objective cell to be as large as possible, click Max.
o If you want the value of the objective cell to be as small as possible, click Min.
o If you want the objective cell to be a certain value, click Value of, and then type the
value in the box.

In the By Changing Variable Cells box, enter a name or reference for each decision
variable cell range. Separate the non-adjacent references with commas. The variable
cells must be related directly or indirectly to the objective cell.
4. In the Subject to the Constraints box, enter any constraints that you
want to apply by doing the following: ...
5. Click Solve