When presenting financial models, both form and substance are important.
When presenting financial models, both form and substance are important. It goes without saying that your assumptions need to be justifiable, the balance sheet, income statement and cash flow statement need to be linked and that the overall story behind the numbers needs to be attractive to investors. But how the numbers are presented is also important. Poorly formatted spreadsheets are a complete turn off to investors. Make it simple for investors to see what you want them to see–namely the story behind the numbers.
Here are some of the most important items to remember when formatting spreadsheets. This assumes that you are working with Microsoft Excel, but the same principles apply regardless of what application you use.
Sheet structure
Microsoft Excel allows you to have multiple worksheets per Excel file. Use them! I have seen many models where the income statement, balance sheet, cash flow statement and other supporting statements are all in the same Excel sheet. Having to scroll to row 1,047 to see your cash balance in month 12 is not associated with good formatting. Make sure you rename each sheet to a name that properly reflects its content.
Colors
Your model should use two colors. Cells that are inputted by the user should be in blue. Cells that are calculated by excel should be in black. All headers should also be in black.
Pagination
Make sure that you test out what your model will look like when printed. Is the pagination correct? Are the first column header and first row header repeated as the pages print? If you manually adjust the print area borders can you achieve a better result?
Assumptions
Finally, make sure that all of your assumptions are kept on a single sheet. Many models have input cells in all sheets and in awkward places. Having a single sheet where the user can see all of your principal assumptions and make adjustments is a more elegant way to present this information. It is also more user-friendly.
Go to the article: How To Format A Killer Spreadsheet For Investors
