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Exploring the Essential Features of “Building Financial Models -John Tjia – McGraw-Hill”
The ability to effectively create and interpret financial models is one of the most valued skills in corporate finance–from Wall Street to Main Street. Now, the acclaimed guide to designing, building, and implementing valuation projection models is fully revised and expanded to keep finance and accounting professionals competitive in today’s marketplace.
This second edition of Building Financial Models continues the tradition of its predecessor by providing a hands-on approach to creating a core model that is supported by broad coverage of cornerstone accounting and finance principles. Additionally, this updated volume features:
- Entirely new coverage of discounted cash flow (DCF) modeling
- Excel formulas for making powerful calculations within the spreadsheet
- In-depth explanations of both the principles and mechanics of projection modelsBuilding Financial Models helps readers practice good thinking and apply sound knowledge of their tools–two key attributes to producing robust and easy-to-use models. This practical guide takes you step by step through the entire process of developing a projection model, with a full chapter dedicated to each phase. By the end, you will have a working, dynamic spreadsheet financial model for making projections for industrial and manufacturing companies.
Furthermore, this Second Edition provides the vocabulary and syntax of model building so you can tailor core models to fit any size company and allow for quick input changes to test sensitivity. The companion website www.buildingfinancialmodel.com offering example spreadsheets will give you a head start on developing your own models.
A flexible and successful financial projection model does more than just add numbers–it explains the complex relationships between those numbers and illuminates ways to use those associations to add value to an enterprise. Building Financial Models is the only book you need to create and implement a fluid financial projection model that is both state of the art and user friendly.
Editorial Reviews
From the Publisher
John S. Tjia is a founding partner of TMG Associates, LLC, a consulting firm that specializes in financial modeling for corporate finance. A former vice president at JPMorgan Chase, he has taught modeling and valuation classes to hundreds of analysts and associates.
From the Back Cover
The most up-to-date guide available for designing, building, and implementing valuation projection models
This updated and augmented second edition of Building Financial Models provides a state-of-the-art method for creating projection models that will accurately determine a company’s valuation today and its earnings and profits tomorrow.
Complete with brand new material on discounted cash flow (DCF) modeling and an accompanying website with example spreadsheets, Building Financial Models is the most comprehensive guide to real-world projection modeling available.
Globally recognized by accounting and finance professionals for its proven step-by-step approach, this hands-on road map to projection model design and implementation features:
- An overview of projection models–what they are, how they are used, and how they vary between industries
- In-depth explanations of the accounting and finance concepts that underpin working financial models
- Detailed directions for using spreadsheet software to create dynamically powerful financial models
- Clear strategies for producing and using a projection model that allows the user to change inputs quickly for sensitivity testing
Building Financial Models is a single, go-to resource that offers unparalleled depth of coverage and breadth of topic.
Get started on Building Financial Models now to develop the skills you need to stay competitive in today’s corporate finance arena.
About the Author
John S. Tjia is a founding partner of TMG Associates, LLC, a consulting firm that specializes in financial modeling for corporate finance. A former vice president at JPMorgan Chase, he has taught modeling and valuation classes to hundreds of analysts and associates.
Product details
Publisher ‏ : ‎ McGraw-Hill Education; 2nd edition (June 17, 2009)
Language ‏ : ‎ English
Top reviews from the United States
Stephen P. Percoco
4.0 out of 5 stars A Systematic Approach to Financial Modeling
Although I have been modeling for over three decades, I had failed to keep up with the evolution of financial modeling standards and so ordered Mr. Tjia’s book to bring me up to date. (The book is listed as a recommended reading for the Advanced Financial Modeler Level I exam.) I found Mr. Tjia’s approach to financial modeling to be systematic and complete. It provides a comprehensive framework that encourages (or requires) the modeler to consider all of the key aspects of a company’s financial reporting practices. In doing so, the modeler will also discover both the strengths and weaknesses of a company’s financial reporting practices. It also provides practical tips on the use of Excel. I have only a couple of complaints about the book. First, it contains too many typographical errors for a book now in its second (and soon to be its third) printing. More importantly, Mr. Tjia attempts to serve financial modeling neophytes by offering, for example, grossly simplified explanations of key financial ratios and metrics. I, for one, would have preferred to see him tackle more advanced topics, such as how to calculate the differences between book and taxable income to get the change in deferred taxes and advanced scenario planning.
Adrienne Wheeler, Ed.D.
5.0 out of 5 stars This author is a financial modeling pioneer
John Tjia’s involvement with the first financial projection model on a mainframe several decades ago and his ongoing work building models for prominent financial sector firms gives him a unique perspective. His book provides straightforward steps for creating integrated financial statement projection models and helpful explanations of the related operating, investing and financial variables that projections are based upon. As with any good introductory text there are plenty of definitions for new terms/concepts such as: one-off model versus template model; integrated financial statement projection model; iteration; the revolver and circular references. Emphasis is also placed upon streamlining the modeling process by determining whether the model under consideration will be: an annual or quarterly model; full-blown or quick & dirty model and what questions will it answer.
A “best practices” chapter lists common sense refinements that make spreadsheets more readable such as color coding input cells and having one location for all input values that are referenced throughout the model using absolute and mixed cell addresses. At the midpoint of the book a simple model is introduced, the five subsequent chapters each add a layer of complexity to that model. The book ends with two chapters that introduce Visual Basic in a thorough yet interesting manner.
Please note that since the first edition of Tjia’s book predates other Financial Modeling textbooks, he makes no assumptions about his readers having any background in financial modeling and explains everything in great detail. Hence the acquisition of Tjia’s book will significantly enhance your arsenal of financial modeling reference materials.
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