Financial Modeling in Excel For Dummies

Chapter 13

Ten Strategies for Reducing Error

IN THIS CHAPTER

Minimizing the errors in your financial models

Focusing on the details that matter

If you aren’t absolutely paranoid about making a mistake in your financial model, you should be! Even people with a little experience using Microsoft Excel know how easy it is to get something wrong. Both formula and logic errors are easy to make — and they’re prevalent in corporate financial models. As a financial modeler, you have to be vigilant about errors as you build the model. In this chapter, I offer up ten strategies you can employ to reduce errors when building your financial models.

Using the Enter Key

The most common errors in financial models are silly formula mistakes — for example, picking up the wrong cell or missing a dollar sign in the cell referencing. Because these mistakes are the easiest ones to make, they’re also the easiest to avoid.

After entering a formula in a cell, press the Enter key. Don’t just click somewhere else.

There are two reasons not to click somewhere else after entering a formula.

• You may accidentally pick up an incorrect cell, which then autocorrects to a completely incorrect formula, as shown ...