Methodology
We refer to our model building methodology as the FAST Standard. Developed over many years, it is characterised by a unique emphasis on transparency / navigability, implementation efficiency / quality, and maintainability / robustness. In turn, we believe this focus is the best and arguably only way to minimise the risk of spreadsheet error. Above all else, it is our deeply held philosophy and practical aim that a well built financial model should be understandable to any business person, regardless of their level of Excel skill.
A model built to the FAST Standard will demonstrate the following 'trade mark' characteristics:
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Calculations broken down into small, simple steps (resulting in short formulas).
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One Excel row per calculation step. Rows are cheap.
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Display of ingredients immediately above each calculation step (referred to as 'call-ups').
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'Live labelling' whereby call-ups labels are also dynamic (and not just the related values).
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Close attention to formula readability. Specifically ordering, anchoring, and spacing of operators.
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Use of a limited (yet sufficient) and easy-to-understand range of Excel functions.
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Linear model flow (top-to-bottom within a worksheet, left-to-right within a workbook).
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Clear marking of such 'counter flow' logic where linear model flow is not practical.
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Careful control and related marking of flows between worksheets (main model sections).
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Through the above features, navigation by simple double-clicking (or using Ctrl + [ ) and F5 + Enter . Also a 'click & jump' table of content.
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Explicit opening balance + movements = closing balance structures for all balance calculations (corkscrews).
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Limited use of Excel Names, thus minimising complexity and improving maintainability.
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Minimum use of / reliance upon macros.
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Unique, industrial strength input management functionality, including the ability to store and compare against past input sets.
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Heavy duty output comparison functionality giving the ability to monitor and analyse model changes against previous key results.
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A comprehensive and standardised set of error checks. Also a number of customised model alerts.
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Financial statement level variance analysis functionality.
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As a matter of course, annually summarised financial statements
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Uniquely flexible and comprehensive graphing functionality.
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Comprehensive inbuilt model documentation, supporting a "self-documenting" model philosophy (ToC, Synopsis, HowTo, ToDo, ChgLog, etc)
Additionally, the FAST Standard also adheres to the following by now generally accepted best modelling practices:
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Clear separation of inputs, calculations, and outputs.
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Clear marking of inputs.
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Minimum use of embedded inputs ('hardcoded' values within formulae).
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Formula equivalency, i.e. one consistent formula per series calculation thus minimising the number of unique formulae.
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Timing flexibility through the use of flags and partial period factors.
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No circularity. Where unavoidable, these should be broken through use of a macro.