Excel is considered to be the tool of opportunity, and it is often the go-to software for most finance professionals. In “Excel Modeling in Corporate Finance” by Craig W. Holden, the author presents numerous typical issues from options valuations to DCF calculations.
The various topics within the book maintain the contents of a typical financial analyst course, like cash flow calculations, yield curves, bond valuations, annuities, capital cost evaluations, option valuations, and financial planning. However, this book is not an average classic finance textbook.
Holden only just touches on financial basics and simply talks about them when needed. The main focus is on implementing and applying the theoretical concepts in Excel in brief. If read alongside a classic financial textbook, the one will be able to enhance their understanding greatly. Each chapter comes with a list of questions which can be solved using and applying the financial model covered in the chapters.
What sets this book apart from other financial textbooks:
Teach by Example: Holden is a firm believer that the best and the most effective way to learn spreadsheet modeling is by working through examples and problem solving and as such his book develops this hands-on, active learning approach. Thus when a student builds themselves, they are able to understand it fully.
Supplement for Corporate Finance Textbooks: When combined with a primary textbook, this book can be a great add on and can be a great supplement – this leaves the student to continue using whatever textbook he or she has been reading and doesn’t need to switch. One can follow an incremental approach and incorporate spreadsheet modeling.
Plain Vanilla Excel: Unlike most other books that teach students programming using Visual Basic for Applications, Excel Modeling in Corporate Finance does everything in plain vanilla excel. Plain vanilla Excel has the advantage of being an intuitive and user-friendly environment that everyone can access.
It is entirely capable of handling a varied range of applications, including the most sophisticated ones. Moreover, all the other features of Excel – like graphing, built-in functions, Solver, etc., are explained as they are used.
Simple Examples: The overall approach in this book is to start with a simple example that builds up to a practical, real-world application. In most chapters, the previous spreadsheet model is taken forward to the next, more complicated model, like the chapter on binomial option pricing, looks into spreadsheet models as :
a single-period model with replicating portfolio
an eight-period model with replicating portfolio
an eight-period model with risk-neutral probabilities
a full-scale, fifty-period model with volatilities estimated from real returns data
The book is printed in a large format, and spreadsheet screenshots and complicated formulas are well arranged and easy to understand. A number of text boxes on the spreadsheets gives additional information.
The book comes with a CD-ROM in which are the PDF copy of the book and all examples in Excel format making it easier for the reader to live to follow all the examples while solving problems through the book. In many places, a lot of formulas are missing, and the reader is asked to fill in the blanks. Concepts taught in the book can be understood easily, and the reader can apply them immediately for better insight.
Holden mostly sticks to Excel 2007 and 2010 as older versions have a chance of being slightly incompatible with few of the examples. In conclusion, this is a must-read for all upcoming and financial modelers who are looking forward to obtaining a financial analyst certification in their future careers.