Vlurn

Common Errors Encountered in a Financial Model due to MS Excel

A financial model, like any other analytical model, isn’t error proof. The financial modelling related errors can be divided into two –

    1. MS Excel related errors
    2. Errors due to poor knowledge of finance and industry

Both these errors can be addressed by a consistent debugging and introducing checks and balances in your model. Let’s have a look at some of the common EXCEL RELATED ERRORS that we often encounter in a financial model.

  1. Hard-coded numbers in formulas
  2. Inconsistent calculations across rows
  3. Linking errors
  4. Signs (positive or negative) related errors
  5. Absolute or mixed referencing while copying
  6. Hidden errors due to IFERROR and ISERROR in outputs
  7. Linking to other workbooks
  8. Circularity (Iterations)
  9. Data Tables (inappropriate linking or principles not followed)

There may be many other mistakes due to improper use of Excel while preparing a financial model, but the above errors are the most common among them.

The following video gives you a glimpse about the same.

July 28, 2015

0 Responses on Common Errors Encountered in a Financial Model due to MS Excel"

Leave a Message

2014-2015 | Vlurn Education Pvt. Ltd . All Rights Reserved