Financial modelling should be collaborative to reduce errors, speed up development time, and lower costs. The Financial Modelling Handbook provides guidance on building better models using the FAST Standard, which is a collaborative, crowd-sourced guide. It is often necessary to perform the same calculation multiple times for different items, so instead of repeating calculation blocks, ingredients that are common to all calculations should be grouped together in a single "2D" calculation block to make models more efficient and easier to review.

3. Financial modelling should be collaborative. Collaboration
reduces error, speeds up development time and lowers
cost. The Financial Modelling Handbook is a collaborative,
crowd-sourced guide to building better financial models
using the FAST Standard.

4. Rashim Raheja is a financial
modeller with F1F9’s Oil and Gas
team. She likes reading novels
and has a keen interest in
sketching and painting.

5. Calculation blocks are a key feature of FAST
models; they help to make models more
readable.
Sometimes however, we have to repeat the
same kind of calculation many times. Having lots
of the same kind of calculation block is not
always the best approach.

6. If you are not yet familiar with the use of
calculation blocks in financial modelling,
download this introductory guide before
you begin.
It will explain how and why calculation
blocks are used in FAST financial
modelling.

7. It’s often the case in modelling that we need to perform the same kind of
calculation numerous times for different items.
In this example there are a number of operating costs. Each has to be
converted from annual to quarterly and an escalation factor applied.

8. In each case some of the ingredients are shared, and some are unique that particular
calculation.
In this case “quarters in a year” and
“forecast period flag” are common to
all calculations
Whereas the annual amount, and
the escalation factor are unique to
each calculation.

9. Although each calculation block is
technically correct, it’s not an optimum
design solution for a number of reasons:
•
Repeating calculation blocks when we
don’t have to makes sheets bigger than
necessary.
•
When the same calculation block is
repeated many times, reviewers have to
check each one to confirm they are in
fact the same. This takes time.
•
Creating many instances of the same
calculation blocks can be highly time
consuming for modellers

10. Image: Scandic Hotels - Flickr

11. Instead of repeating the same kind of
calculation block multiple times . . .
Image: Scandic Hotels - Flickr
One block is created with each kind
of ingredient grouped. . .

12. Calculation block ingredients are
grouped by type. For example the
annual amount, and escalation
factors differ for each operating cost
and so each different ingredient is
listed.
Ingredients that do not change
between calculations are not
repeated. For example the number of
quarters in a year, and the forecast
period flag.

13. 2D calculation blocks still follow the
convention “ingredients followed by
calculation” with the calculation at the
bottom of the block.
However with 2D blocks there are a
series of calculations at the bottom of
the block.
When the block is “ungrouped” all the
calculations and ingredients can
been seen.

14. In the grouped state, only the first
instance of the calculation is visible.
By understanding this calculation, the
user can understand all the other
instances that are grouped within the
block, since they are all the same.
In the grouped state the total of all
the calculations is still visible.

15. The structuring convention for 2D
blocks is that a blank line is left after
of the “2D ingredient” – i.e. those
ingredients that differ between each
element of the calculation.
Blank lines are not left after “1D
ingredients”. i.e. ingredients that are
common to each element of the
calculation.