Financial Modeling: core skill across all finance domain

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Financial Modeling is one of the most valued skills in the corporate world today. It is a numerical representation of a company’s performance in past, present, and near future. Financial models are used as decision making aids. These are further used by financial analysts to predict the impact of affairs on a company’s stock and shares, taking into consideration internal factors. It is a critical job that requires precision and detailed know-how. However,  some expert Financial Modeling Books can provide an easy way to learn the art. 

What is a Financial Model and How it helps in decision making?

Financial models are used to estimate or compare companies’ valuation to their peers in the industry. It is used to make strategic planning, calculation of the cost of new projects, setting budgets accordingly, and allocating corporate resources. 

However, financial models are most commonly used for making operational business decisions and financial analysis. It is mostly used by executives to make decisions like:

  • Budgeting and forecasting
  • Organic business growth
  • Valuing the company
  • Acquiring other business and new assets
  • Distributing organization’s financial resource
  • Raising capital in the form of debts and equity  
  • Risk management
  • Pricing policy

One can learn Financial Modeling either by enrolling in an institute or self-learning by referring to some of the expert books available for beginners, intermediate and professionals.  It should be noted that the market is a pandora box full of such books. Here are some of the best books from that pandora box.

Here is the list of top 10 best Financial Modeling book

1. Financial Modeling

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Author: Simon Benninga

Price: Kindle Edition – Rs 6274.80

Hardcover Edition: Rs 6783

Available – Amazon 

This is the fourth edition of the book and is for anyone who wants to learn financial modeling. From cover to cover, the book brings deep insights into the process of financial modeling. This financial modeling book by Benninga is entirely focused on the subject. In particular, this book is useful for people who don’t know what financial modeling is and need to understand the concept as a requirement of the profession. In short, Benninga’s FInancial Modeling is for beginners. People with knowledge of VBA, Advance Excel, and complex financial modeling can even refresh their skills with this book. Moreover, it is also a must-read for professionals who want to be a pro in Excel.

The Financial Modeling book explains the uses of Excel in the financial model. Excel spreadsheets are used to elaborate the fundamental model and sophisticated model in the field of portfolio management, corporate finance, bonds and more.

In addition to the above mentioned subjects, this book is also packed with the wealth of novel methodologies for corporate valuation. Financial Modeling book is the best resource to understand the tools and strategies used for performing financial analysis. This is why Financial Modeling by Benninga is a must read for people who look for an abundance in reality, detailed, simple to apply, and novel quantitative finance methods.

Major sections of the book include – 

  • Corporate finance
  • Excel spreadsheets
  • Portfolio management
  • Financial issues resolved with Excel software
  • Concept of corporate finance, investment, and its derivatives
  • Tips on deriving actual data from internet

Best takeaways

  • Separate sections for Nelson-Siegel model and Monte Carlo method
  • Learn VBA from basic level to advance level along with its technical aspects
  • The new edition of the book provides access code to download excel worksheets and the solutions

2. Financial Analysis and Modeling using Excel and VBA

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Author: Chandan Sengupta

Price: Rs 8650

Available: Amazon

This financial modeling book is a comprehensive book for novice students. In more than 700 pages, every concept is covered and explained in detail. In short, you can learn excel and VBA from the beginners level. However, an advanced professional can not expect too much from this book, but can use it as a  reference book. 

If you want to understand VBA and the process to incorporate it into your financial models, the book will be of great help. Financial Analysis and Modeling using Excel and VBA provides details of using Excel 2007 along with VBA to analyze financial issues in all significant areas of finance.

In addition to the understanding of Excel and VBA, the book provides know-how on creating reports, charts, graphs, custom forms of data, automation, processing, and a host of other functions with VBA features in Excel. Data analysis, tables, sensitivity analysis, and statistical analysis are some of the other concepts covered in this book.

Financial Analysis and Modeling using Excel and VBA will lead you through the range of real-time practical projects related to financial issues. It will give a hand-on experience of approaching the goal by following the steps mentioned in the book. If you are interested in rigorous practice in VBA and hone your skills to become proficient in it, this book is for you.

 Best takeaways

  • An idea of Ribbon, PivotTables, statistical analysis, and data analysis, which are the keys for financial analysis and modeling
  • Financial modeling and analysis, and Excel and VBA capabilities are explained using step-by-step method
  • Quick construction of formulas to provide answers to what-if questions and iteratively solve problems

3. Financial Modeling in Practice: A Concise Guide for Intermediate and Advanced Levels. 

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Author: Michael Rees

Kindle Edition Price: Rs 8411.30

Hardcover Price: Rs 8854

Available: Amazon

As the title reveals, this book is for people with some fundamental knowledge in financial modeling. This book is well balanced with concepts and applications. It is invaluable for financial experts looking to sharpen their knowledge on methods and approaches towards it. Moreover, the examples given in the book are indispensable for professionals. Author Michael Rees takes the readers bit-by-bit to an array of useful tools and strategies used in everyday corporate world. Hence, it helps the readers to get familiar with the real-time scenario. The author has made meticulous efforts for creating adaptable and fully dynamic financial models best suited to a great variety of company decision making circumstances.

 The “Principles of Financial Modeling” book holds treasures like materials for financial training and consulting. Along with data structure and layout optimization, financial balance, transparency, financial model audition, and managing circularity are also at the focal point of the book. It is a perfect blend of financial modeling principles and industry best practices. In addition to this, the book also includes sensitivity and scenario analysis, and data analysis with the use of Excel and VBA functionalities. On the whole, Principles of Financial Modeling gives comprehensive insights into the real world of financial modeling. In short, if you are ready to put yourself beyond your comfort zone, then this book is for you. 

 Major section of the book

  • Financial statements models
  • Risk Analysis
  • Valuation of cash flow

Best takeaways

  • Fluff free book to extract great amount of stuff from it
  • Fundamental difference in approach of financial modeling
  • Additionally a CD-ROM is available with the book enable to access excel models and practical problems

4. Financial Modeling – A Practical Guide to Investment Banking and Private Equity 

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Author: Paul Pignataro

Hardcover Price: Rs 4300

Available: Amazon 

One of the top rated financial modeling books written by the CEO and Founder of the acclaimed New York School of Finance. Basically, it is a beginners book, even dummies in finance can understand. The book instructs the essential techniques and basic tools for absolute determination of the heartiness of stock investment. 

Especially, this book is valuable for people who thrive in corporate finance, want to become investment bankers, or want to have a successful career in equity analysis. Moreover, with the help of this book, you can develop an understanding of financial modeling techniques and stockpile the information related to acquisitions, mergers, investment banking, and private equity. Investment banking is the most detailed explained chapter. This book is aimed at beginners; however, any professional looking to upgrade their understanding can have it. 

Financial modeling book by Paul Pignataro is different from other similar books. It is based on an extensive case study of Wal-Mart and takes you step-by-step in creating a sophisticated financial model. It exhibits the process of analysis of the company’s financial position. In short, by the time you finish the book, you will be able to build a financial model and its valuation.

 Major section of the book

  • A discussion of valuation methods, including LTM data calculation, EBITDA and Net Income smoothing, chapter-end queries
  • Practice models with typical interview questions
  • Financial modeling using Wall Street models can be downloaded

Best takeaways

  • Knowledge of balance sheet, income statement, cash flow statement, balance sheet balancing, depreciation, and many more
  • Detailed study of the valuation techniques 
  • Analysis, Precedent Transaction Analysis

5. Financial Modeling for Business Owners and Entrepreneurs

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Author: Tom Y. Sawyer

Kindle Edition Price: Rs 3360.63

Hardcover Price: Rs 4129

Available: Amazon

As the name of the financial modeling book suggests, it is for the business owners, entrepreneurs, managers, and senior corporate executives. The book is a combination of financial modeling and fundamental business ideas. Along with this, Financial Modeling for Business Owners and Entrepreneurs also provides a detailed guide for solving any particular company issues. In other words, this book is as practical as it can be. 

This book is a link between business thinking and financial modeling. Entrepreneurs who are new in the business field and don’t know any technicalities of financial modeling can go through this book. It will help to bridge the gap and enable learning various real time skills, like developing an excel model, raising the capital, increasing the profit and revenues, project management, and many more. Basically, it is the guide for business owners and entrepreneurs who are willing to break down their company into operational and functional components.

In other words, this comprehensive book is the combination of logical and methodical approach to utilize Excel to plan and execute any particular business issues. 

Major section of the book 

  • Effective and simple linking of financial modeling and business planning
  • Quick learning to create and test different aspects related to business model
  • Offers clear and easy techniques to formulate ideas and create potential routes for a startup

Best takeaways

  • Analyzing ROI will no more be a gigantic task
  • Along with learning, you will also get the knowledge of different situations and related strategic moves needed to make during launching of new products or startups
  • Make aware of loopholes to avoid traps and obstacles

6. Building Financial Models

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Author: John Tjia

Hardcover Price: Rs 17,016.62

Available: Amazon

This financial modeling book is the outcome of the experience gained by the author. John is actively involved for years in creating different financial models for renowned financial institutions. Basically, it is one of the best instructional guides for students and professionals. Emphasizing on the presentation aspects and the creation of error-free financial models, John helps the readers to implement their learning in real-time assignments. 

Building Financial Models book provides proper guidance to accelerate all the skills required in a financial career. It gives you absolute knowledge of the latest techniques and strategies. Moreover, the instructions given have the characteristics of brevity and intelligibility, helping mastering the fundamentals and advanced elements easily.

Beginners financial modelers who want to be well up on the financial modeling terms and jargon should read this book. Undoubtedly, John is very keen to provide an exclusive and conclusive understanding of critical and new concepts in it, like iterations, revolver and circular references, one-off versus template models, and integrated financial statement projection models. In short, this book covers every possible angle of financial modeling and helps to become a pro in it. 

Major section of the book

  • Explain the projection models, ways to use it, and how they differ by industry
  • Financial models are pinned up with accounting and finance ideas
  • Detailed instruction on using spreadsheet software for creating effective financial models

7. The Mathematics of Financial Modeling and Investment Management

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Author: Sergio M. Focardi & Frank J. Fabozzi

Hardcover Price: Rs 9,000

Available: Amazon

Time and again, it is recapitulated that people who want to have a successful career as financial modeler should have a knack for mathematics, business mathematics, economics, and statistics. They should be able to clutch the concepts of financial modeling incicisinely. 

This financial modeling book answers all the mathematical questions behind financial modeling.

The Mathematics of Financial Modeling and Investment Management book is especially for professionals or people who already have hands-on experience and fundamental knowledge in it. Moreover, they should also have the idea of using a mathematical framework. Hence, this book is a refresher for those who want to revise the concepts of quants section of finance.  The great thing about this book is that it will take you through every possible concept needed for quantitative finance.

Best takeaways

  • Along with the concepts of quantitative finance and financial modeling, you will also learn the examples that will help in crystal clearing the concepts
  • You will also learn derivative pricing, arbitrage pricing, interest rate modeling, credit risk modeling,  and much more.

8. Mastering Financial Modelling in Microsoft Excel: A Practitioner’s Guide To Applied Corporate Finance

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Author: Alastair Day

Kindle Edition: Rs 2704.59

Hadrcover Price: Rs 8854

Available: Amazon

The financial modeling book by Alastair Day is a treasury of techniques and strategies. In this book, the author has done an excellent job of elucidating the complex financial issues easy to understand while maintaining accuracy of financial models. Alastair provides in-depth knowledge of Microsoft Excel through this book. 

Along with the spreadsheet, you will also learn about different valuation methods, testing, process of risk taking, and scenario analysis to measure the practicability of decisions made during making of financial models. Moreover, with the help of this book, you will have a better understanding of Financial Excel function and formulas, helping you to bring more accurate results. Hence, more perfection in achieving the business objectives.

The book is divided into two sections. The first section offers templates, methodologies, and major features while the second section describes creating Excel corporate financial models. A CD is provided with this book to help modify templates and models. In short, if you want to master the financial model, this book is a must read.

Major sections of the book

  • Design, methods, and processes for spreadsheet
  • Procedure for calculating and enhancing current models
  • Testing each scenario to prevent expensive errors
  • Identification of new variables
  • Idea on usage of Excel functions and formulae in various tasks

9. Handbook of Financial Modeling by Jack Avon

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Author: Jack Avon

Paperback Price: Rs 3716

Available: Flipkart

This financial modeling book is a gem for people who want to pursue investment banking and management. Rather, with the help of this book, you will be able to think from both perspectives- the financial modeler and the end-user.

Handbook of Financial Modeling has a diligent approach to understand investment management. Along with it, the book also offers a 360 degree learning of it. It will make you an efficient financial modeler, able to handle any complex business decision making and providing solutions. 

Moreover, this book adds a dimension to the thinking process in finance modeling. You can apply different concepts of it boosted with fundamental knowledge of accounting and financial components. In other words, this book has every detail of successful ideation, designing, or execution of financial models.

Moreover, with the help of the Handbook of Financial Modeling, you will also learn the dispersion of important points derived from financial models to the relevant clients. It will suggest solutions to the problems to ensure the smooth running of the business, ultimately reaching the goal of generating profitable investments. 

In this 504 pages book, one will have almost everything to learn and to apply related to financial modeling. In short, this gem book is a must read.

Best takeaways 

  • Learn the logic behind the thinking of the end-user
  • Learn the finance concept and fundamental accounting needs to create financial models
  • Route of planning, designing, and creating a functional financial models

10. Financial Modeling: A Backward Stochastic Differential Equations Perspective

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Author: Stephanie Crepey

Kindle Edition Price: Rs 4426.93

Paperback Price: Rs 4619.63

Hardcover Price: Rs 6607 

Available: Amazon

Stephane Crepey authored Financial Modeling: A Backward Stochastic Differential Equations Perspective is one of the best financial modeling books. This book is for intermediate and advanced students of financial modeling. Moreover, having a prior knowledge of basics is compulsory to pick up this book. It is fit for people having natural inclination toward mathematics, business mathematics, and statistics. Financial Modeling: A Backward Stochastic Differential Equations Perspective teaches mathematical computations framework and the best use of it in financial modeling techniques. 

Backward Stochastic Differential Equations (BSDEs) provides guidance on solving pricing and risk management issues with the focus on creating financial models considering all the factors.

In short, as mentioned above, to appreciate this book, you should have a better understanding of mathematics and statistics.

Best takeaways

  • Learn nonlinear pricing problem
  • Learn and use BSDEs in nonlinear pricing and risk management problem
  • Includes computational finance and financial modeling

Books are the best friends forever. But to have a better understanding of financial modeling and the techniques related to it, you should have proper expert guidance. There are many institutes providing this course, both online and offline. One of the best of them is Henry Harvin. 

Henry Harvin

Henry Harvin is a Global Edtech company. It is one of the best educational institutes in India and abroad. It offers more than 400 courses, one of which is a Financial modeling course. Henry Harvin was ranked first in India by The Hans India. The brand presence and recognition is unbeatable. After the completion of the course from Henry Harvin, the aspirant will get a certificate that has an affiliation with MSME and the Government of India.

Uses of Financial Modeling 

  • Risk Management
  • Mergers and Acquisitions
  • Budgeting and Forecasting
  • Option Pricing
  •  Valuation of a Company
  • Raising Capital
  • Capital Allocation

Learning Benefits

  • Develop a Robust Financial Model
  • Get acquainted with the formatting of Excel Sheets
  • Learn the advanced Financial Techniques
  • Learn the mechanics of Financial reporting
  • Acquire the understanding of income statement, cash flow statement, and balance sheet
  • Learn about application of ratio analysis and financial statement 
  • Preparation of final statement with analysis and forecast

Conclusion

When it comes to the corporate finance world, Excel is omniscient, omnipotent, and omnipresent, whether it is related to data analysis or decision making. You will feel its power in productivity and also in numerical tools, once you are familiar with it. 

The books listed above have a lot of practical worksheets with examples and templates which will further enhance your understanding of financial modeling. Sincere and meticulous reading of one or more books with rigorous practice will make you a pro in it.

Recommended Reads

FAQs

Q1. What are the majors of financial modeling?

Ans. There are four major components of financial modeling. They are:
Income statement
Balance sheet
Cash flow statement
Debt schedule

Q2. What are the most common practices in financial modeling?

Ans. Some of the common practices in financial modeling are:
Clarify the business problem
Plan the structure
Simplify as much as possible
Build structural integrity
Test the model

Q3. What is the salary of a financial modeler in India?

Ans. The salary of a financial modeler and conversion associate in India ranges from Rs 3.7 Lakhs to Rs 7.2 Lakhs.

Q4. Is financial modeling difficult?

Ans. Yes, it is hard if you are figuring it out on your own. However, with the help of professional training programs, it has become a lot easier.

1 Comment

  1. This books is good to take provided that you can remain self-motivated throughout the semester. In financial modelling book are very help full important notes provide inside the books. Thanks to written this amazing blog.

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