Building Financial Models with Microsoft Excel

Book Preface

Before joining Microsoft, I spent a decade in consulting, focused primarily on helping customers implement financial and customer systems. These systems were the lifeblood of a company’s financial modeling and decision support systems; they were responsible for ensuring quick and reliable business decisions, making the company more competitive while driving shareholder value. Given their importance to the business, we took great care in designing and delivering the analytical and reporting capabilities of these systems.

After implementing the modeling and reporting capabilities, I always enjoyed sitting down with the users to understand how they were utilizing their new tools. To my amazement, in almost every discussion with a user, the most noted feature of the reporting capabilities we delivered was the “Export to Excel” button. The robust capabilities that we had built for users were replaced by a tool that sat on every information worker’s desktop that we could not match with any amount of effort—Microsoft Office Excel.

Financial modeling represents the practice of projecting a business’s operating results. The process of building, maintaining, and using financial models involves many interrelated and complex steps. The extent to which the process of building financial models is made more straightforward through the use of Excel as a financial modeling tool is captured nicely in the title of this book, Building Financial Models with Microsoft Excel.

As one would expect, we use Excel for financial modeling inside Microsoft. In fact, when Microsoft deployed its financial, human resources, and customer systems, we started with Excel as the primary modeling, analytical, and reporting tool. We use financial models on a regular basis inside Microsoft to achieve business goals, and financial modeling has represented a key component of Microsoft’s practice of planning for, and investing in, the future.

It is impressive to see employees at Microsoft model scenarios with Excel that are completely integrated with our back-end customer, product, and financial data. In addition, employees feel empowered in their ability to spend most of their time analyzing, modeling, and making business decisions, rather than hunting for data, crunching numbers, or making assumptions because of a lack of reliable data.