From the course: Business Finance: Introduction to Financial Modeling
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Documenting the financial model design
From the course: Business Finance: Introduction to Financial Modeling
Documenting the financial model design
- [Instructor] How many times have you heard about IT systems that fail due to poor design, or buildings that need to be demolished and rebuilt due to construction flaws? Back in 2009, I remember scratching my head when an activity-based costing model that I had developed one day broke. You see, over time I kept adding each requirement to the model and creating new calculations and the like. The model eventually reached breaking point. After taking some time to reflect, it occurred to me that I actually hadn't taken the time to design this thing upfront. I mean, imagine getting a builder to lay the foundations for a house without having a blueprint. You just wouldn't do it. Now, whilst you don't need to live in a financial model, building one without having a basic design brief really is a recipe for disaster. At this point, you're probably wondering, what exactly is a financial model design. Well, essentially it's a summary of how the model will look and operate from inputs right…
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