Modeling - Financial Modeling

Excel, VBA
Skill
Logic
Flow

Little abstract
Practical stuff
Doing, very little talking, lecturing

5 min, 50 min, 15 min - Talk, Work, Present

Tax model - very little past knowledge required
MIN
MAX

5
15

6
6

9
9

IF
Lead you to branches (basic modules of decision making)
Great
Nested Ifs
Dont change column sizes
Dont use wrap text
Dont use merge and center
Dont change row heights unless reaaaaaally required
Dont enter hard numbers unless reaaaaaally required
Use formula as much as possible

1 Learn good use of Excel in modeling

Tax model
Financial statements model
To strengthen your conceptual base

5
15

2 VBA
3 Financial instruments modeling
Share prices
Options
Binomial models

Financial Modeling
Give you a small caselet, ask you to work, provide you with the objective, you co
the solution
One right solution - but million right ways to doing it
No theory, no strategy, no vision, no mission
Simple hard work
5 min, 50 min, 15 min
1 Dont know Excel
2 Too much of Excel / VBA

Two caselets
1 Financial statements
2 Tax modeling

Mastering the basics - needs help

Forget the objective, get lost in the technique
Thought
Skill
Flow

VBA Basics
Financial instruments modeling
1 Options
2 Share price paths
3 Binomial trees

1 Numbers need a format

2 Hard numbers should be rare rare rare in the worksheet
Unless really compelled, dont use numbers
Use formula
3 Within a formula, dont use hard numbers - bad practice
4 Dont use wrap text, dont use merge and center - wrong things
5 Dont use several row heights
6 Dont change width of columns
7 Use appropriate file names

vide you with the objective, you come up with

asics - needs help

ctive, get lost in the technique

er - wrong things

Financial Year
Corporate Tax Rate
MAT Tax Rate

30.00%
18.50%

10%
10%

3%
3%

33.99%
20.96%

MAT Carry Forward allowed for (years)

PBT as given
PBT Sensitivity
Profit Before Tax (PBT)
Book Depreciation
Tax Depreciation

10
-

(2.59)

(4.50)

(4.75)

(2.59)
-

(4.50)
-

(4.75)
-

100%

10

11

of Taxable Income
of PBT
Higher of the two

388.78

394.39

408.28

420.50

433.46

446.33

460.03

388.78
205.89
614.34

394.39
244.98
639.01

408.28
245.65
544.64

420.50
244.98
461.46

433.46
244.98
392.24

446.33
244.98
333.40

460.03
245.65
284.17

12

13

14

15

16

17

18

471.73

484.28

496.70

510.04

521.07

509.68

463.68

471.73
244.98
240.77

484.28
244.98
204.65

496.70
244.98
173.96

510.04
245.65
148.27

521.07
244.98
125.62

509.68
244.98
106.78

463.68
244.98
90.76

19

20

21

22

23

24

25

451.61

437.91

424.56

560.58

583.51

568.08

553.28

451.61
245.65
77.36

437.91
244.98
65.54

424.56
244.98
55.71

560.58
64.63
47.36

583.51
21.39
40.36

568.08
21.33
34.20

553.28
21.33
29.07

26

27

28

29

30

485.62

422.10

410.04

401.29

106.85

485.62
21.33
24.71

422.10
21.39
21.06

410.04
21.33
17.84

401.29
21.33
15.17

106.85
3.46
2.07

Retail Store Project

Rs cr
10
12
25
3
2
52

Deposit for Premises

Fit outs
Inventories
Other Current Assets
Cash Balance

Sales in month one

Growth in sales every month
Forecast period (months)
Cost of Goods as a % of Sales
Fixed SGA
Variable SGA as a % of Sales
Day 1 Capital Structure Equity:Debt
Day 1 Short Term : Long Term Debt
Long Term Debt tenor - months
Repayable in equal monthly instalments
Inventory Level - months of forecasted COGS
Receivables level - days of past Sales
Life of Fitouts - months
Vendor Payables - months
Interest Rate
Yield on Excess Cash
Tax Rate

Months
Profit & Loss
Sales Revenue
COGS
Variable SGA
Fixed SGA
EBIDTA
Depreciation

SUM 60M
798.36
558.85
23.95
90.00
125.56
12.00

7
2%
60
70%
1.5
3%
50:50
25:75
60

102%

5
3
60
1
10%
6%
30.90%

1
7.00
4.90
0.21
1.50
0.39
0.20

2
7.14
5.00
0.21
1.50
0.43
0.20

3
7.28
5.10
0.22
1.50
0.47
0.20

EBIT
Interest - Long Term Debt
Interest - Short Term Debt
Interest Income - Treasury
PBT
Tax
PAT

113.56
4.96
2.77
(0.41)
106.25 32.83 73.42 -

0.19
0.16
0.05
0.03
0.01
0.02

26.00
26.00

26.00
(0.02)
25.98

26.00
0.01
26.01

26.00
0.07
26.07

Long Term Loans

Short Term Loans
Vendor Payables
Total Liabilities

19.50
6.50
52.00

19.18
2.44
5.91
53.51

18.85
3.46
5.52
53.84

18.53
3.97
5.63
54.19

Assets
Deposit for Premises
Fit Outs

10.00
12.00

10.00
11.80

10.00
11.60

10.00
11.40

Inventories
Receivables
Other Curent Assets
Cash Balance
Excess Cash / Treasury
Total Assets

25.00
3.00
2.00
52.00

26.01
0.70
3.00
2.00
53.51

26.53
0.71
3.00
2.00
53.84

27.06
0.73
3.00
2.00
54.19

226.84

2.44

3.46

3.97

Short Term Loans/Treasury

Cash Flow Statement

Send you the template on email
Build some control checks

0.27
0.16
0.03
0.08
0.02
0.06

Balance Sheet
Liabilities
Share Capital
Reserves
Shareholders Funds

Control Check

0.23
0.16
0.02
0.05
0.01
0.03
2

Key Metrics
This is an intended project, not yet off the ground
You may take the leap, you may not, depends on key metrics
What can help, hurt
What can make it a great success, a abysmal failure
What is the extent of help or hurt - quantification
What are the outputs which you would seek - think
What are the key inputs

Long Term Debt

Opening Balance
Repayments
Closing Balance
Interest

19.50

19.50
0.33
19.18
0.16

19.18
0.33
18.85
0.16

18.85
0.33
18.53
0.16

We assume that repayments are effected at the month end

Vendor Payables
COGS leads you to Inventories
Inventories lead you to Purchases
Purchases lead you to Payments
Payments lead you to Vendor Payables

Inventories and Purchases

Closing Inventories
COGS
Sub Total
Less : Opening Inventories
Purchases

26.01
4.90
30.91
25.00
5.91

26.53
5.00
31.53
26.01
5.52

27.06
5.10
32.16
26.53
5.63

As Vendor Payables are 1 month, the Payables at each month will be the same as Purchases

Work to do
Can you separate the short term into pure short term loan (liability) and treasury investme

50%
25%

50%
75%

7.43
5.20
0.22
1.50
0.51
0.20

7.58
5.30
0.23
1.50
0.55
0.20

Equity
Debt
26.00
26.00
6.50 Short Term
19.50 Long Term

6
7.73
5.41
0.23
1.50
0.59
0.20

7
7.88
5.52
0.24
1.50
0.63
0.20

8
8.04
5.63
0.24
1.50
0.67
0.20

9
8.20
5.74
0.25
1.50
0.71
0.20

10
8.37
5.86
0.25
1.50
0.76
0.20

0.31
0.15
0.03
0.12
0.04
0.08

0.35
0.15
0.04
0.16
0.05
0.11

0.39
0.15
0.04
0.20
0.06
0.14

0.43
0.15
0.04
0.24
0.07
0.16

0.47
0.14
0.05
0.28
0.09
0.19

0.51
0.14
0.05
0.32
0.10
0.22

0.56
0.14
0.06
0.37
0.11
0.25

10

26.00
0.15
26.15

26.00
0.26
26.26

26.00
0.40
26.40

26.00
0.56
26.56

26.00
0.75
26.75

26.00
0.98
26.98

26.00
1.23
27.23

18.20
4.45
5.74
54.54

17.88
4.92
5.86
54.91

17.55
5.37
5.97
55.29

17.23
5.80
6.09
55.68

16.90
6.21
6.21
56.08

16.58
6.61
6.34
56.49

16.25
6.98
6.47
56.92

10.00
11.20

10.00
11.00

10.00
10.80

10.00
10.60

10.00
10.40

10.00
10.20

10.00
10.00

27.60
0.74
3.00
2.00
54.54

28.15
0.76
3.00
2.00
54.91

28.72
0.77
3.00
2.00
55.29

29.29
0.79
3.00
2.00
55.68

29.88
0.80
3.00
2.00
56.08

30.47
0.82
3.00
2.00
56.49

31.08
0.84
3.00
2.00
56.92

4.45

4.92

5.37

5.80

6.21

6.61

6.98

18.53
0.33
18.20
0.15

18.20
0.33
17.88
0.15

17.88
0.33
17.55
0.15

17.55
0.33
17.23
0.15

17.23
0.33
16.90
0.14

16.90
0.33
16.58
0.14

16.58
0.33
16.25
0.14

Opening Stock + Purchases - COGS = Closing Stock

OR : Purchases = Closing Stock + COGS - Opening Stock

27.60
5.20
32.80
27.06
5.74

28.15
5.30
33.46
27.60
5.86

28.72
5.41
34.13
28.15
5.97

29.29
5.52
34.81
28.72
6.09

onth will be the same as Purchases of that month

n (liability) and treasury investment (asset)

29.88
5.63
35.51
29.29
6.21

30.47
5.74
36.22
29.88
6.34

31.08
5.86
36.94
30.47
6.47

11
8.53
5.97
0.26
1.50
0.80
0.20

12
8.70
6.09
0.26
1.50
0.85
0.20

13
8.88
6.21
0.27
1.50
0.90
0.20

14
9.06
6.34
0.27
1.50
0.94
0.20

15
9.24
6.47
0.28
1.50
0.99
0.20

16
9.42
6.59
0.28
1.50
1.04
0.20

17
9.61
6.73
0.29
1.50
1.09
0.20

0.60
0.14
0.06
0.41
0.13
0.28

0.65
0.13
0.06
0.46
0.14
0.32

11

0.70
0.13
0.06
0.50
0.16
0.35

12

0.74
0.13
0.07
0.55
0.17
0.38

13

0.79
0.12
0.07
0.60
0.19
0.41

14

0.84
0.12
0.07
0.65
0.20
0.45

15

0.89
0.12
0.07
0.70
0.22
0.49

16

17

26.00
1.51
27.51

26.00
1.83
27.83

26.00
2.17
28.17

26.00
2.56
28.56

26.00
2.97
28.97

26.00
3.42
29.42

26.00
3.91
29.91

15.93
7.33
6.59
57.36

15.60
7.66
6.73
57.81

15.28
7.96
6.86
58.27

14.95
8.25
7.00
58.75

14.63
8.51
7.14
59.24

14.30
8.75
7.28
59.75

13.98
8.96
7.43
60.27

10.00
9.80

10.00
9.60

10.00
9.40

10.00
9.20

10.00
9.00

10.00
8.80

10.00
8.60

31.71
0.85
3.00
2.00
57.36

32.34
0.87
3.00
2.00
57.81

32.99
0.89
3.00
2.00
58.27

33.65
0.91
3.00
2.00
58.75

34.32
0.92
3.00
2.00
59.24

35.01
0.94
3.00
2.00
59.75

35.71
0.96
3.00
2.00
60.27

7.33

7.66

7.96

8.25

8.51

8.75

8.96

16.25
0.33
15.93
0.14

15.93
0.33
15.60
0.13

15.60
0.33
15.28
0.13

15.28
0.33
14.95
0.13

14.95
0.33
14.63
0.12

14.63
0.33
14.30
0.12

14.30
0.33
13.98
0.12

31.71
5.97
37.68
31.08
6.59

32.34
6.09
38.43
31.71
6.73

32.99
6.21
39.20
32.34
6.86

33.65
6.34
39.99
32.99
7.00

34.32
6.47
40.78
33.65
7.14

35.01
6.59
41.60
34.32
7.28

35.71
6.73
42.43
35.01
7.43

18
9.80
6.86
0.29
1.50
1.15
0.20

19
10.00
7.00
0.30
1.50
1.20
0.20

20
10.20
7.14
0.31
1.50
1.25
0.20

21
10.40
7.28
0.31
1.50
1.31
0.20

22
10.61
7.43
0.32
1.50
1.36
0.20

23
10.82
7.58
0.32
1.50
1.42
0.20

24
11.04
7.73
0.33
1.50
1.48
0.20

0.95
0.12
0.07
0.76
0.23
0.52

1.00
0.11
0.08
0.81
0.25
0.56

18

1.05
0.11
0.08
0.86
0.27
0.60

19

1.11
0.11
0.08
0.92
0.28
0.64

20

1.16
0.11
0.08
0.98
0.30
0.68

21

1.22
0.10
0.08
1.04
0.32
0.72

22

1.28
0.10
0.08
1.10
0.34
0.76

23

24

26.00
4.43
30.43

26.00
4.99
30.99

26.00
5.58
31.58

26.00
6.22
32.22

26.00
6.90
32.90

26.00
7.62
33.62

26.00
8.38
34.38

13.65
9.15
7.58
60.80

13.33
9.31
7.73
61.35

13.00
9.45
7.88
61.91

12.68
9.55
8.04
62.49

12.35
9.64
8.20
63.08

12.03
9.69
8.36
63.69

11.70
9.71
8.53
64.32

10.00
8.40

10.00
8.20

10.00
8.00

10.00
7.80

10.00
7.60

10.00
7.40

10.00
7.20

36.42
0.98
3.00
2.00
60.80

37.15
1.00
3.00
2.00
61.35

37.89
1.02
3.00
2.00
61.91

38.65
1.04
3.00
2.00
62.49

39.42
1.06
3.00
2.00
63.08

40.21
1.08
3.00
2.00
63.69

41.01
1.10
3.00
2.00
64.32

9.15

9.31

9.45

9.55

9.64

9.69

9.71

13.98
0.33
13.65
0.12

13.65
0.33
13.33
0.11

13.33
0.33
13.00
0.11

13.00
0.33
12.68
0.11

12.68
0.33
12.35
0.11

12.35
0.33
12.03
0.10

12.03
0.33
11.70
0.10

36.42
6.86
43.28
35.71
7.58

37.15
7.00
44.15
36.42
7.73

37.89
7.14
45.03
37.15
7.88

38.65
7.28
45.93
37.89
8.04

39.42
7.43
46.85
38.65
8.20

40.21
7.58
47.79
39.42
8.36

41.01
7.73
48.74
40.21
8.53

25
11.26
7.88
0.34
1.50
1.54
0.20

26
11.48
8.04
0.34
1.50
1.60
0.20

27
11.71
8.20
0.35
1.50
1.66
0.20

28
11.95
8.36
0.36
1.50
1.73
0.20

29
12.19
8.53
0.37
1.50
1.79
0.20

30
12.43
8.70
0.37
1.50
1.86
0.20

31
12.68
8.88
0.38
1.50
1.92
0.20

1.34
0.10
0.08
1.16
0.36
0.80

1.40
0.09
0.08
1.23
0.38
0.85

25

1.46
0.09
0.08
1.29
0.40
0.89

26

1.53
0.09
0.08
1.36
0.42
0.94

27

1.59
0.09
0.08
1.42
0.44
0.98

28

1.66
0.08
0.08
1.49
0.46
1.03

29

1.72
0.08
0.08
1.57
0.48
1.08

30

31

26.00
9.18
35.18

26.00
10.02
36.02

26.00
10.92
36.92

26.00
11.85
37.85

26.00
12.84
38.84

26.00
13.87
39.87

26.00
14.95
40.95

11.38
9.71
8.70
64.96

11.05
9.67
8.88
65.62

10.73
9.60
9.05
66.30

10.40
9.50
9.23
66.99

10.08
9.37
9.42
67.70

9.75
9.20
9.61
68.43

9.43
9.00
9.80
69.18

10.00
7.00

10.00
6.80

10.00
6.60

10.00
6.40

10.00
6.20

10.00
6.00

10.00
5.80

41.84
1.13
3.00
2.00
64.96

42.67
1.15
3.00
2.00
65.62

43.53
1.17
3.00
2.00
66.30

44.40
1.19
3.00
2.00
66.99

45.28
1.22
3.00
2.00
67.70

46.19
1.24
3.00
2.00
68.43

47.11
1.27
3.00
2.00
69.18

9.71

9.67

9.60

9.50

9.37

9.20

9.00

11.70
0.33
11.38
0.10

11.38
0.33
11.05
0.09

11.05
0.33
10.73
0.09

10.73
0.33
10.40
0.09

10.40
0.33
10.08
0.09

10.08
0.33
9.75
0.08

9.75
0.33
9.43
0.08

41.84
7.88
49.72
41.01
8.70

42.67
8.04
50.71
41.84
8.88

43.53
8.20
51.73
42.67
9.05

44.40
8.36
52.76
43.53
9.23

45.28
8.53
53.81
44.40
9.42

46.19
8.70
54.89
45.28
9.61

47.11
8.88
55.99
46.19
9.80

32
12.93
9.05
0.39
1.50
1.99
0.20

33
13.19
9.23
0.40
1.50
2.06
0.20

34
13.46
9.42
0.40
1.50
2.13
0.20

35
13.72
9.61
0.41
1.50
2.21
0.20

36
14.00
9.80
0.42
1.50
2.28
0.20

37
14.28
10.00
0.43
1.50
2.36
0.20

38
14.56
10.20
0.44
1.50
2.43
0.20

1.79
0.08
0.08
1.64
0.51
1.13

1.86
0.08
0.07
1.71
0.53
1.18

32

1.93
0.07
0.07
1.79
0.55
1.24

33

2.01
0.07
0.07
1.87
0.58
1.29

34

2.08
0.07
0.07
1.95
0.60
1.35

35

2.16
0.07
0.06
2.03
0.63
1.40

36

2.23
0.06
0.06
2.11
0.65
1.46

37

38

26.00
16.08
42.08

26.00
17.27
43.27

26.00
18.50
44.50

26.00
19.79
45.79

26.00
21.14
47.14

26.00
22.54
48.54

26.00
24.00
50.00

9.10
8.77
10.00
69.95

8.78
8.50
10.20
70.74

8.45
8.19
10.40
71.54

8.13
7.84
10.61
72.37

7.80
7.46
10.82
73.22

7.48
7.03
11.04
74.08

7.15
6.57
11.26
74.97

10.00
5.60

10.00
5.40

10.00
5.20

10.00
5.00

10.00
4.80

10.00
4.60

10.00
4.40

48.06
1.29
3.00
2.00
69.95

49.02
1.32
3.00
2.00
70.74

50.00
1.35
3.00
2.00
71.54

51.00
1.37
3.00
2.00
72.37

52.02
1.40
3.00
2.00
73.22

53.06
1.43
3.00
2.00
74.08

54.12
1.46
3.00
2.00
74.97

8.77

8.50

8.19

7.84

7.46

7.03

6.57

9.43
0.33
9.10
0.08

9.10
0.33
8.78
0.08

8.78
0.33
8.45
0.07

8.45
0.33
8.13
0.07

8.13
0.33
7.80
0.07

7.80
0.33
7.48
0.07

7.48
0.33
7.15
0.06

48.06
9.05
57.11
47.11
10.00

49.02
9.23
58.25
48.06
10.20

50.00
9.42
59.42
49.02
10.40

51.00
9.61
60.60
50.00
10.61

52.02
9.80
61.82
51.00
10.82

53.06
10.00
63.05
52.02
11.04

54.12
10.20
64.31
53.06
11.26

39
14.86
10.40
0.45
1.50
2.51
0.20

40
15.15
10.61
0.45
1.50
2.59
0.20

41
15.46
10.82
0.46
1.50
2.67
0.20

42
15.77
11.04
0.47
1.50
2.76
0.20

43
16.08
11.26
0.48
1.50
2.84
0.20

44
16.40
11.48
0.49
1.50
2.93
0.20

45
16.73
11.71
0.50
1.50
3.02
0.20

2.31
0.06
0.05
2.20
0.68
1.52

2.39
0.06
0.05
2.28
0.71
1.58

39

2.47
0.05
0.05
2.37
0.73
1.64

40

2.56
0.05
0.04
2.46
0.76
1.70

41

2.64
0.05
0.04
2.56
0.79
1.77

42

2.73
0.05
0.03
2.65
0.82
1.83

43

2.82
0.04
0.02
2.75
0.85
1.90

44

45

26.00
25.52
51.52

26.00
27.10
53.10

26.00
28.74
54.74

26.00
30.44
56.44

26.00
32.21
58.21

26.00
34.04
60.04

26.00
35.94
61.94

6.83
6.06
11.48
75.89

6.50
5.51
11.71
76.82

6.18
4.92
11.95
77.78

5.85
4.28
12.18
78.76

5.53
3.60
12.43
79.76

5.20
2.87
12.68
80.79

4.88
2.09
12.93
81.84

10.00
4.20

10.00
4.00

10.00
3.80

10.00
3.60

10.00
3.40

10.00
3.20

10.00
3.00

55.20
1.49
3.00
2.00
75.89

56.30
1.52
3.00
2.00
76.82

57.43
1.55
3.00
2.00
77.78

58.58
1.58
3.00
2.00
78.76

59.75
1.61
3.00
2.00
79.76

60.95
1.64
3.00
2.00
80.79

62.16
1.67
3.00
2.00
81.84

6.06

5.51

4.92

4.28

3.60

2.87

2.09

7.15
0.33
6.83
0.06

6.83
0.33
6.50
0.06

6.50
0.33
6.18
0.05

6.18
0.33
5.85
0.05

5.85
0.33
5.53
0.05

5.53
0.33
5.20
0.05

5.20
0.33
4.88
0.04

55.20
10.40
65.60
54.12
11.48

56.30
10.61
66.91
55.20
11.71

57.43
10.82
68.25
56.30
11.95

58.58
11.04
69.62
57.43
12.18

59.75
11.26
71.01
58.58
12.43

60.95
11.48
72.43
59.75
12.68

62.16
11.71
73.88
60.95
12.93

46
17.06
11.95
0.51
1.50
3.11
0.20

47
17.41
12.18
0.52
1.50
3.20
0.20

48
17.75
12.43
0.53
1.50
3.29
0.20

49
18.11
12.68
0.54
1.50
3.39
0.20

50
18.47
12.93
0.55
1.50
3.49
0.20

51
18.84
13.19
0.57
1.50
3.59
0.20

52
19.22
13.45
0.58
1.50
3.69
0.20

2.91
0.04
0.02
2.85
0.88
1.97

3.00
0.04
0.01
2.95
0.91
2.04

46

3.09
0.04
0.00
3.06
0.94
2.11

47

3.19
0.03
(0.00)
3.16
0.98
2.18

3.29
0.03
(0.01)
3.27
1.01
2.26

3.39
0.03
(0.01)
3.37
1.04
2.33

3.49
0.02
(0.02)
3.48
1.08
2.41

49

50

51

52

48

26.00
37.91
63.91

26.00
39.95
65.95

26.00
42.06
68.06

26.00
44.24
70.24

26.00
46.50
72.50

26.00
48.83
74.83

26.00
51.24
77.24

4.55
1.27
13.19
82.91

4.23
0.39
13.45
84.02

3.90
13.72
85.68

3.58
14.00
87.81

3.25
14.28
90.02

2.93
14.56
92.32

2.60
14.85
94.69

10.00
2.80

10.00
2.60

10.00
2.40

10.00
2.20

10.00
2.00

10.00
1.80

10.00
1.60

63.41
1.71
3.00
2.00
82.91

64.68
1.74
3.00
2.00
84.02

65.97
1.78
3.00
2.00
0.53
85.68

67.29
1.81
3.00
2.00
1.51
87.81

68.63
1.85
3.00
2.00
2.54
90.02

70.01
1.88
3.00
2.00
3.62
92.32

71.41
1.92
3.00
2.00
4.76
94.69

1.27

0.39

(0.53)

(1.51)

(2.54)

(3.62)

(4.76)

4.88
0.33
4.55
0.04

4.55
0.33
4.23
0.04

4.23
0.33
3.90
0.04

3.90
0.33
3.58
0.03

3.58
0.33
3.25
0.03

3.25
0.33
2.93
0.03

2.93
0.33
2.60
0.02

63.41
11.95
75.35
62.16
13.19

64.68
12.18
76.86
63.41
13.45

65.97
12.43
78.40
64.68
13.72

67.29
12.68
79.97
65.97
14.00

68.63
12.93
81.57
67.29
14.28

70.01
13.19
83.20
68.63
14.56

71.41
13.45
84.86
70.01
14.85

53
19.60
13.72
0.59
1.50
3.79
0.20

54
19.99
14.00
0.60
1.50
3.90
0.20

55
20.39
14.28
0.61
1.50
4.01
0.20

56
20.80
14.56
0.62
1.50
4.12
0.20

57
21.22
14.85
0.64
1.50
4.23
0.20

58
21.64
15.15
0.65
1.50
4.34
0.20

59
22.08
15.45
0.66
1.50
4.46
0.20

3.59
0.02
(0.02)
3.59
1.11
2.48

3.70
0.02
(0.03)
3.71
1.15
2.56

3.81
0.02
(0.04)
3.83
1.18
2.64

3.92
0.01
(0.04)
3.95
1.22
2.73

4.03
0.01
(0.05)
4.07
1.26
2.81

4.14
0.01
(0.06)
4.19
1.30
2.90

4.26
0.01
(0.06)
4.32
1.33
2.98

53

54

55

56

57

58

59

26.00
53.72
79.72

26.00
56.28
82.28

26.00
58.93
84.93

26.00
61.65
87.65

26.00
64.46
90.46

26.00
67.36
93.36

26.00
70.34
96.34

2.28
15.15
97.14

1.95
15.45
99.68

1.63
15.76
102.31

1.30
16.08
105.03

0.98
16.40
107.84

0.65
16.73
110.74

0.33
17.06
113.73

10.00
1.40

10.00
1.20

10.00
1.00

10.00
0.80

10.00
0.60

10.00
0.40

10.00
0.20

72.84
1.96
3.00
2.00
5.95
97.14

74.29
2.00
3.00
2.00
7.19
99.68

75.78
2.04
3.00
2.00
8.49
102.31

77.29
2.08
3.00
2.00
9.86
105.03

78.84
2.12
3.00
2.00
11.27
107.84

80.42
2.16
3.00
2.00
12.75
110.74

82.03
2.21
3.00
2.00
14.30
113.73

(5.95)

(7.19)

(8.49)

(9.86)

(11.27)

(12.75)

(14.30)

2.60
0.33
2.28
0.02

2.28
0.33
1.95
0.02

1.95
0.33
1.63
0.02

1.63
0.33
1.30
0.01

1.30
0.33
0.98
0.01

0.98
0.33
0.65
0.01

0.65
0.33
0.33
0.01

72.84
13.72
86.56
71.41
15.15

74.29
14.00
88.29
72.84
15.45

75.78
14.28
90.05
74.29
15.76

77.29
14.56
91.86
75.78
16.08

78.84
14.85
93.69
77.29
16.40

80.42
15.15
95.57
78.84
16.73

82.03
15.45
97.48
80.42
17.06

60
22.52
15.76
0.68
1.50
4.58
0.20

61
62
63
64
Not real, only for selective usage
22.97
23.43
23.90
24.37
16.08
16.40
16.73
17.06
0.69
0.70
0.72
0.73
1.50
1.50
1.50
1.50
4.70
4.83
4.95
5.08
0.20
0.20
0.20
0.20

65
24.86
17.40
0.75
1.50
5.21
0.20

66
25.36
17.75
0.76
1.50
5.35
0.20

4.38
0.00
(0.07)
4.45
1.37
3.07

4.50
-

4.63
-

4.75
-

4.88
-

5.01
-

5.15
-

4.50
1.39
3.11

4.63
1.43
3.20

4.75
1.47
3.28

4.88
1.51
3.37

5.01
1.55
3.46

5.15
1.59
3.56

60

61
62
63
64
65
66
Not real, only for selective usage
26.00
26.00
26.00
26.00
26.00
26.00
26.00
73.42
76.53
79.72
83.01
86.38
89.84
93.40
99.42 102.53 105.72 109.01 112.38 115.84 119.40
0.00
17.40
116.82

10.00
0.00
83.67
2.25
3.00
2.00
15.90
116.82
(15.90)

0.33
0.33
0.00
0.00

83.67
15.76
99.43
82.03
17.40

CASELET ONE
PROJECTION OF INVENTORIES
Projected Cost of Goods Sold of several months are provided below
Month
1
2
3
4
5
COGS Rs cr
81
45
65
83
91

The management wants to project inventories at the end of month one

This inventory level could range from 1 month to 8 months - do not allow the user to ent
Create a model where the user will define the number of months and your model will com
the Inventory Rs Cr
There are at least three functions available in Excel to get what you want
So, please provide at least three solutions to the problem

CASELET TWO
Type
Income Slabs - depend on type
Male
0 200000 500000
Female
0 225000 525000
Senior
0 350000 600000
Tax Rates
0%
10%

of taxpayer
1000000 50000000
1025000 50000000
1200000 50000000
20%
30%

Work out a model where the tax to be paid gets computed for each type of taxpayer
for various levels of income upto Rs 5 cr

CASELET THREE
This company is not able to work out the average selling price of its product
Please help
Location
Sales Revenue
Units Sold
Selling Price
Average Selling Price

B
10
2
5

#DIV/0!

C
30
40
3
0
10 #DIV/0!

CASELET FOUR
Selling Price is determined based on order volume as per the following slabs
Units
Price
1
15
100
10
150
9
200
8
50000
7
For various order sizes, work out the selling price using a model
Your boss has had severe challenges in deciphering IF functions written by his
colleagues - so he has prohibited the use of IF function in this solution

CASELET FIVE
Further work on the tax model
1 We have modeled the MAT carry forward as 10 years, a fixed number
What if we want to paramterize this number so that it could be 10, 9, 12, 20, 5
2 In our regular tax, we have assumed that there is no restriction on loss carry fo
But in reality, there is a limit of 8 years beyond which business losses will lapse
3 There is a section 80-IA in the law which allows you a deduction of your regula
income) for 10 years - such that your taxable income for regular tax becomes z
MAT applies (10 years is consecutive)
This section allows you to choose these 10 years as you would like it - out of th
starting from the year in which you start commercial production
Which is the optimal set of 10 years such that I pay min tax

CASELET SIX
Further work on the retail model
1 We wish to paramterize the inventories months (instead of a fixed 5 months le
Assume that inventories months can vary from 1 month to 8 months, intervals o
2 We wish to parameterize the vendors payable months
Assume that vendors payable months can vary from 1 month to 2.5 months in i
of half months
3 Generate a Cash Flow Statement for each month (Indirect Method)
4 Generate a Cash Flow Statement for each month (Direct Method)

6
102

7
122

8
153

9
125

onth one
o not allow the user to enter data outside this range
hs and your model will come up with

at you want

each type of taxpayer

of its product

D
50
5
10

10
138

11
111

12
104

ollowing slabs

s written by his

, a fixed number
it could be 10, 9, 12, 20, 5 years whatever
restriction on loss carry forwards
h business losses will lapse
a deduction of your regular profits (taxable
for regular tax becomes zero

ou would like it - out of the first 15 years

production

ead of a fixed 5 months level)

nth to 8 months, intervals of 1 month

1 month to 2.5 months in intervals

direct Method)
rect Method)

Nifty
960
974
965
972
968
964
968
982
978
991
1,000
1,007
1,016
1,011
1,021
1,036
1,046
1,052
1,038
1,044
1,051
1,057
1,052
1,083
1,086
1,093
1,101
1,089
1,086
1,107
1,117
1,126
1,134
1,132

Develop a model which will work as follows:

Buy when the Nifty goes above the 200 dma - bu
Sell when the Nifty goes below the 100 dma - se
Then paramterize these 200, 100 days so that yo
The model should provide:
Daily buy signals
Daily sells signals
Keep track of costs, sales, profits
Keep track of cash flows
Compute the NPV at say 20% discounting rate
DMA
Price > x days DMA - Buy
Price < y days DMA - Sell
No of transactinos
No of profit trn
No of loss trn
Average profit per trn
Av loss per trn
Max drawdown

1,134
1,146
1,139
1,141
1,146
1,146
1,162
1,161
1,172
1,159
1,169
1,152
1,140
1,115
1,110
1,120
1,136
1,163
1,169
1,175
1,183
1,186
1,196
1,204
1,184
1,171
1,200
1,223
1,234
1,235
1,247
1,248
1,286
1,281
1,288
1,302

1,312
1,270
1,319
1,340
1,341
1,357
1,376
1,387
1,359
1,373
1,398
1,418
1,407
1,410
1,406
1,372
1,330
1,358
1,341
1,303
1,319
1,303
1,325
1,371
1,358
1,387
1,401
1,417
1,421
1,449
1,479
1,478
1,488
1,507
1,523
1,549

1,521
1,537
1,565
1,570
1,546
1,507
1,495
1,486
1,506
1,522
1,485
1,481
1,499
1,517
1,557
1,601
1,619
1,611
1,612
1,604
1,595
1,601
1,610
1,577
1,550
1,563
1,579
1,564
1,543
1,520
1,541
1,544
1,569
1,599
1,616
1,658

1,661
1,671
1,676
1,645
1,646
1,676
1,688
1,696
1,700
1,724
1,736
1,733
1,757
1,779
1,789
1,788
1,805
1,838
1,879
1,869
1,880
1,912
1,946
1,955
1,928
1,918
1,969
1,972
1,945
1,987
1,983
1,944
1,902
1,929
1,895
1,825

1,771
1,848
1,904
1,863
1,844
1,809
1,769
1,824
1,804
1,835
1,881
1,892
1,892
1,876
1,914
1,914
1,920
1,917
1,858
1,853
1,808
1,834
1,787
1,766
1,798
1,852
1,859
1,844
1,868
1,885
1,866
1,844
1,805
1,812
1,763
1,750

1,452
1,456
1,460

1,750
1,716
1,726
1,685
1,697
1,692
1,704
1,747
1,762
1,745
1,771
1,856
1,841
1,871
1,856
1,854
1,860
1,839
1,879
1,864
1,869
1,868
1,844
1,844
1,874
1,891
1,890
1,819
1,817
1,821
1,796
1,769
1,789
1,810
1,833
1,804

1,769
1,699
1,708
1,717
1,583
1,393
1,508
1,567
1,545
1,564
1,609
1,608
1,590
1,586
1,507
1,484
1,508
1,536
1,495
1,522
1,543
1,550
1,548
1,545
1,508
1,481
1,501
1,495
1,512
1,491
1,483
1,475
1,445
1,472
1,489
1,514

1,519
1,507
1,537
1,538
1,527
1,558
1,567
1,517
1,549
1,560
1,535
1,523
1,538
1,559
1,572
1,566
1,582
1,588
1,602
1,618
1,601
1,595
1,619
1,632
1,640
1,631
1,626
1,655
1,633
1,643
1,652
1,624
1,598
1,598
1,624
1,604

1,582
1,609
1,591
1,578
1,592
1,596
1,611
1,609
1,629
1,632
1,636
1,630
1,635
1,644
1,651
1,656
1,649
1,668
1,675
1,686
1,684
1,703
1,734
1,729
1,750
1,753
1,726
1,722
1,717
1,701
1,728
1,744
1,777
1,806
1,812
1,793

1,816
1,813
1,818
1,808
1,785
1,795
1,796
1,787
1,809
1,790
1,780
1,778
1,781
1,784
1,801
1,787
1,798
1,814
1,838
1,836
1,852
1,864
1,860
1,876
1,872
1,873
1,879
1,890
1,892
1,873
1,873
1,893
1,904
1,899
1,940
1,961

1,963
1,992
1,996
1,991
1,994
1,978
1,990
1,971
1,985
2,007
2,029
2,033
2,013
2,028
2,041
2,036
2,045
2,062
2,064
2,072
2,071
2,060
2,080
2,117
2,104
2,032
1,998
2,017
1,983
1,954
1,923
1,955
1,932
1,933
1,934
1,928

1,925
1,909
1,932
1,955
2,008
2,058
2,062
2,052
2,079
2,097
2,055
2,055
2,070
2,063
2,083
2,098
2,090
2,069
2,062
2,055
2,043
2,059
2,058
2,057
2,061
2,103
2,085
2,093
2,129
2,148
2,161
2,169
2,161
2,168
2,154
2,147

2,129
2,124
2,098
2,118
2,097
2,061
2,027
2,016
2,029
1,984
1,995
2,036
2,068
2,063
2,054
2,069
2,053
2,033
2,003
2,025
2,023
1,956
1,928
1,909
1,931
1,951
1,968
1,971
1,959
1,936
1,943
1,903
1,917
1,921
1,943
1,962

1,978
2,001
1,991
1,986
1,993
1,992
2,013
1,991
1,983
1,992
1,992
2,016
2,029
2,044
2,073
2,077
2,073
2,088
2,088
2,064
2,094
2,092
2,092
2,095
2,112
2,103
2,091
2,104
2,111
2,128
2,124
2,131
2,145
2,168
2,187
2,184

2,194
2,200
2,170
2,192
2,220
2,212
2,231
2,211
2,228
2,184
2,196
2,219
2,221
2,204
2,185
2,213
2,234
2,237
2,241
2,231
2,267
2,289
2,304
2,318
2,312
2,322
2,359
2,358
2,367
2,362
2,325
2,322
2,359
2,381
2,362
2,370

2,405
2,401
2,383
2,370
2,326
2,323
2,355
2,359
2,338
2,369
2,385
2,406
2,417
2,422
2,429
2,449
2,456
2,484
2,500
2,493
2,525
2,555
2,567
2,577
2,568
2,481
2,478
2,559
2,574
2,599
2,608
2,601
2,630
2,664
2,644
2,577

2,577
2,569
2,584
2,538
2,488
2,485
2,468
2,421
2,398
2,444
2,395
2,418
2,409
2,353
2,315
2,367
2,386
2,419
2,464
2,493
2,489
2,501
2,549
2,559
2,558
2,604
2,620
2,603
2,573
2,609
2,635
2,665
2,684
2,712
2,698
2,652

2,700
2,698
2,661
2,662
2,695
2,707
2,756
2,777
2,813
2,805
2,779
2,808
2,843
2,826
2,827
2,836
2,804
2,746
2,807
2,793
2,824
2,837
2,836
2,883
2,904
2,900
2,913
2,910
2,869
2,851
2,851
2,834
2,810
2,811
2,871
2,900

2,886
2,909
2,942
2,983
2,969
3,001
2,972
2,968
2,941
3,001
3,018
3,009
3,026
3,040
3,001
3,023
3,022
2,982
3,009
3,036
3,051
3,062
3,050
3,068
3,075
3,124
3,151
3,147
3,190
3,183
3,117
3,129
3,184
3,197
3,197
3,227

3,234
3,265
3,263
3,241
3,247
3,283
3,321
3,325
3,354
3,421
3,403
3,473
3,483
3,526
3,455
3,479
3,380
3,342
3,429
3,524
3,540
3,577
3,573
3,549
3,463
3,555
3,507
3,508
3,558
3,604
3,631
3,649
3,669
3,695
3,721
3,756

3,704
3,651
3,503
3,525
3,636
3,392
3,254
3,069
3,204
3,115
3,178
3,207
3,216
3,182
3,073
2,962
3,093
3,015
2,935
2,857
2,721
2,868
2,774
2,665
2,634
2,800
2,892
2,919
2,861
2,924
2,994
3,043
3,052
2,944
2,982
2,983

2,994
3,129
3,151
3,137
3,198
3,158
3,077
3,145
3,125
3,196
3,166
3,124
3,007
2,996
2,944
3,025
2,945
2,990
3,040
3,110
3,158
3,131
3,128
3,129
3,183
3,190
3,177
3,152
3,212
3,255
3,260
3,275
3,315
3,360
3,355
3,357

3,370
3,364
3,337
3,369
3,386
3,405
3,426
3,405
3,414
3,436
3,471
3,474
3,477
3,455
3,470
3,363
3,390
3,455
3,472
3,479
3,494
3,458
3,507
3,554
3,545
3,524
3,572
3,580
3,572
3,589
3,571
3,516
3,565
3,570
3,567
3,582

3,563
3,622
3,669
3,726
3,715
3,711
3,679
3,681
3,683
3,656
3,677
3,739
3,771
3,744
3,769
3,793
3,805
3,812
3,799
3,778
3,796
3,835
3,862
3,866
3,876
3,877
3,853
3,860
3,918
3,955
3,945
3,975
3,966
3,923
3,929
3,956

4,002
4,001
4,016
4,015
4,016
3,962
3,849
3,717
3,766
3,850
3,888
3,929
3,832
3,815
3,835
3,871
3,943
3,974
3,972
3,966
4,008
4,027
3,990
3,983
3,933
3,911
3,852
3,945
4,053
4,091
4,085
4,075
4,126
4,090
4,103
4,067

4,092
4,148
4,124
4,083
4,140
4,193
4,217
4,198
4,232
4,224
4,187
4,069
4,045
4,047
4,149
4,165
4,107
4,097
4,046
3,939
3,948
3,893
3,745
3,812
3,727
3,577
3,662
3,627
3,762
3,717
3,735
3,768
3,645
3,639
3,611
3,680

3,698
3,765
3,877
3,863
3,819
3,759
3,789
3,820
3,634
3,690
3,735
3,753
3,844
3,848
3,862
3,830
3,921
4,014
3,990
3,999
4,000
4,084
4,085
4,134
4,170
4,182
4,082
4,089
4,169
4,118
4,111
4,077
4,080
4,070
4,079
4,134

4,125
4,172
4,217
4,218
4,263
4,280
4,246
4,198
4,248
4,258
4,293
4,296
4,301
4,269
4,286
4,198
4,180
4,184
4,140
4,155
4,113
4,186
4,177
4,144
4,214
4,249
4,268
4,251
4,259
4,286
4,264
4,282
4,318
4,315
4,358
4,359

4,353
4,385
4,419
4,404
4,388
4,446
4,506
4,497
4,499
4,500
4,564
4,564
4,620
4,621
4,593
4,619
4,442
4,444
4,529
4,356
4,356
4,404
4,342
4,357
4,462
4,394
4,325
4,374
4,366
4,171
4,109
4,210
4,081
4,160
4,113
4,194

4,302
4,318
4,360
4,413
4,467
4,482
4,480
4,476
4,519
4,507
4,510
4,499
4,498
4,530
4,518
4,494
4,550
4,735
4,753
4,837
4,939
4,938
4,943
4,996
5,022
5,069
5,212
5,208
5,186
5,063
5,328
5,439
5,525
5,428
5,671
5,659

5,551
5,360
5,203
5,185
5,478
5,499
5,564
5,709
5,918
5,869
5,904
5,855
5,932
5,847
5,782
5,779
5,703
5,661
5,612
5,704
5,943
5,913
5,908
5,911
5,779
5,565
5,524
5,611
5,729
5,700
5,618
5,634
5,765
5,870
5,862
5,941

5,964
5,974
5,960
6,067
6,159
6,056
6,038
5,778
5,730
5,752
5,771
5,988
6,069
6,080
6,095
6,137
6,145
6,184
6,179
6,271
6,282
6,288
6,278
6,167
6,209
6,226
6,065
5,938
5,908
5,705
5,203
4,903
5,208
5,035
5,381
5,280

5,284
5,172
5,141
5,316
5,464
5,470
5,323
5,132
5,121
4,878
4,837
4,945
5,203
5,304
5,278
5,267
5,157
5,183
5,112
5,201
5,271
5,266
5,285
5,223
4,959
4,867
4,918
4,768
4,796
4,870
4,869
4,624
4,745
4,520
4,535
4,577

4,617
4,879
4,829
4,830
4,942
4,736
4,741
4,754
4,767
4,631
4,761
4,707
4,748
4,734
4,780
4,882
4,891
4,956
5,037
5,044
5,023
4,999
5,113
5,092
5,198
5,265
5,227
5,192
5,157
5,136
5,071
4,981
5,009
4,958
5,011
5,116

5,157
5,106
5,117
5,027
4,954
4,877
4,863
4,926
4,844
4,869
4,739
4,719
4,587
4,681
4,626
4,522
4,470
4,524
4,540
4,536
4,573
4,653
4,583
4,504
4,351
4,271
4,190
4,253
4,315
4,136
4,040
3,895
4,095
3,927
4,002
4,029

3,991
4,156
4,166
4,047
4,039
3,862
3,823
3,963
4,092
4,158
4,247
4,476
4,441
4,282
4,332
4,191
4,314
4,332
4,426
4,396
4,506
4,515
4,518
4,529
4,621
4,548
4,524
4,431
4,393
4,365
4,416
4,284
4,318
4,335
4,337
4,291

4,231
4,356
4,359
4,513
4,445
4,358
4,485
4,468
4,397
4,292
4,232
4,073
4,075
4,005
4,041
4,249
4,224
4,126
4,162
4,109
3,990
3,849
3,922
3,954
3,817
3,607
3,604
3,502
3,273
3,494
3,518
3,334
3,269
3,108
3,125
3,235

3,065
2,936
2,584
2,526
2,685
2,696
2,885
3,050
3,156
2,998
2,893
2,973
3,147
2,938
2,848
2,813
2,802
2,683
2,634
2,554
2,691
2,708
2,652
2,746
2,755
2,673
2,658
2,657
2,787
2,715
2,786
2,934
2,915
2,918
2,984
3,040

2,955
3,063
3,077
3,039
2,967
2,920
2,857
2,923
2,980
2,963
3,035
3,059
3,122
3,113
2,920
2,869
2,775
2,748
2,832
2,737
2,829
2,843
2,777
2,715
2,705
2,686
2,771
2,849
2,824
2,872
2,774
2,781
2,803
2,779
2,843
2,920

2,933
2,927
2,897
2,948
2,854
2,755
2,777
2,789
2,737
2,733
2,762
2,786
2,765
2,672
2,612
2,646
2,577
2,620
2,575
2,617
2,716
2,776
2,758
2,797
2,807
2,807
2,924
2,939
2,982
3,079
3,109
2,982
3,024
3,061
3,211
3,255

3,346
3,342
3,381
3,484
3,370
3,385
3,377
3,365
3,331
3,424
3,481
3,470
3,372
3,479
3,665
3,662
3,617
3,682
3,616
3,555
3,669
3,632
3,598
3,673
4,325
4,319
4,270
4,212
4,238
4,240
4,117
4,276
4,341
4,450
4,530
4,526

4,530
4,573
4,582
4,428
4,552
4,657
4,638
4,585
4,478
4,515
4,353
4,251
4,314
4,223
4,247
4,294
4,244
4,375
4,392
4,292
4,374
4,347
4,430
4,166
4,202
4,079
4,081
4,003
3,974
4,121
4,224
4,231
4,378
4,502
4,469
4,410

4,525
4,569
4,573
4,566
4,513
4,572
4,634
4,706
4,681
4,694
4,592
4,487
4,435
4,474
4,459
4,605
4,579
4,390
4,458
4,394
4,453
4,537
4,642
4,659
4,679
4,688
4,731
4,662
4,624
4,609
4,609
4,682
4,783
4,805
4,814
4,819

4,830
4,808
4,895
4,959
4,964
4,977
5,020
4,977
4,985
4,959
5,008
5,087
5,076
5,004
5,032
5,011
4,993
4,945
5,054
5,119
5,109
5,159
5,115
5,063
4,987
4,997
4,971
4,847
4,826
4,751
4,712
4,567
4,712
4,768
4,796
4,899

4,882
5,004
4,952
4,997
5,059
5,062
5,044
4,989
5,053
5,105
5,092
5,116
5,005
4,942
5,040
5,123
5,125
5,132
5,109
5,069
5,148
5,112
5,136
5,117
5,106
5,033
5,047
5,042
4,984
4,953
4,990
5,145
5,181
5,189
5,171
5,201

5,277
5,278
5,282
5,264
5,264
5,251
5,213
5,235
5,260
5,254
5,274
5,226
5,220
5,094
5,035
5,009
4,863
4,866
4,882
4,908
4,831
4,931
4,820
4,713
4,755
4,761
4,793
4,757
4,828
4,802
4,859
4,915
4,887
4,849
4,857
4,870

4,859
4,859
4,936
5,016
5,097
5,081
5,092
5,121
5,102
5,116
5,132
5,134
5,129
5,198
5,233
5,247
5,261
5,206
5,225
5,261
5,284
5,303
5,260
5,249
5,291
5,370
5,366
5,376
5,302
5,354
5,341
5,323
5,273
5,279
5,208
5,230

5,249
5,270
5,299
5,322
5,308
5,215
5,254
5,278
5,224
5,148
5,124
5,072
5,027
5,190
5,134
5,158
5,181
5,094
5,060
5,065
4,924
4,947
4,944
4,945
4,807
4,915
5,006
5,076
5,086
4,971
5,020
5,113
5,133
5,037
4,985
5,000

5,079
5,120
5,201
5,225
5,234
5,275
5,267
5,354
5,316
5,323
5,321
5,271
5,334
5,254
5,312
5,251
5,237
5,236
5,293
5,242
5,297
5,352
5,370
5,402
5,387
5,377
5,393
5,387
5,369
5,399
5,442
5,447
5,420
5,436
5,398
5,408

5,370
5,433
5,441
5,470
5,448
5,440
5,487
5,461
5,419
5,421
5,452
5,422
5,416
5,478
5,541
5,531
5,541
5,505
5,462
5,490
5,409
5,414
5,403
5,472
5,486
5,480
5,576
5,604
5,608
5,639
5,760
5,795
5,861
5,829
5,885
5,981

6,008
5,991
5,959
6,018
6,036
6,029
5,991
6,030
6,145
6,159
6,151
6,187
6,121
6,106
6,136
6,091
6,234
6,176
6,113
6,114
6,003
6,009
6,113
6,101
6,116
6,075
6,040
6,021
6,092
6,128
6,151
6,210
6,322
6,335
6,281
6,303

6,286
6,182
6,080
6,143
6,076
6,011
5,921
5,972
5,947
5,884
5,829
5,790
5,812
5,871
6,023
6,013
6,034
5,995
5,954
5,924
5,761
5,883
5,929
5,931
5,911
5,927
5,960
6,019
6,006
5,940
6,013
6,005
6,005
6,062
6,105
6,177

6,173
6,141
6,107
6,031
5,901
5,768
5,800
5,851
5,752
5,649
5,683
5,737
5,656
5,692
5,717
5,763
5,725
5,614
5,453
5,537
5,470
5,430
5,520
5,430
5,432
5,293
5,246
5,220
5,340
5,468
5,468
5,502
5,558
5,457
5,504
5,452

5,409
5,321
5,330
5,382
5,478
5,586
5,490
5,466
5,542
5,516
5,456
5,437
5,420
5,476
5,455
5,475
5,409
5,391
5,411
5,502
5,589
5,645
5,687
5,756
5,803
5,835
5,842
5,924
5,908
5,889
5,887
5,805
5,748
5,899
5,824
5,716

5,786
5,883
5,860
5,877
5,884
5,851
5,783
5,767
5,690
5,568
5,532
5,478
5,575
5,556
5,547
5,538
5,492
5,542
5,496
5,448
5,448
5,451
5,457
5,385
5,389
5,373
5,414
5,494
5,492
5,561
5,530
5,566
5,504
5,509
5,535
5,524

5,518
5,470
5,486
5,494
5,420
5,413
5,372
5,281
5,305
5,269
5,343
5,441
5,549
5,567
5,615
5,706
5,680
5,660
5,623
5,633
5,735
5,648
5,557
5,542
5,569
5,603
5,582
5,570
5,642
5,555
5,577
5,634
5,688
5,589
5,492
5,479

5,528
5,493
5,402
5,412
5,204
5,084
4,948
5,197
5,128
5,194
5,126
5,030
5,078
4,859
4,844
4,925
4,934
4,915
4,839
4,806
4,973
5,110
4,999
4,993
5,080
5,139
5,161
4,982
4,978
4,965
5,062
5,123
5,068
5,043
5,154
5,054

4,874
4,879
4,905
5,006
4,924
4,990
4,874
4,824
4,791
4,884
4,887
5,020
5,011
5,131
5,057
5,156
5,049
5,080
5,087
5,107
5,115
5,138
5,215
5,342
5,359
5,279
5,217
5,242
5,325
5,292
5,310
5,160
5,217
5,131
5,059
5,027

4,899
4,874
4,795
4,780
4,708
4,731
4,769
4,864
4,766
4,971
4,941
5,037
5,050
5,037
4,871
4,907
4,734
4,789
4,713
4,753
4,623
4,636
4,636
4,637
4,763
4,718
4,780
4,756
4,681
4,660
4,640
4,676
4,775
4,749
4,724
4,756

4,748
4,772
4,863
4,841
4,862
4,844
4,905
4,978
4,995
5,045
5,025
5,065
5,152
5,217
5,164
5,125
5,198
5,272
5,276
5,379
5,413
5,344
5,343
5,400
5,382
5,381
5,461
5,514
5,574
5,562
5,610
5,490
5,479
5,448
5,311
5,425

5,366
5,369
5,360
5,343
5,266
5,207
5,294
5,420
5,391
5,491
5,463
5,380
5,337
5,257
5,267
5,361
5,256
5,274
5,243
5,232
5,146
5,207
5,296
5,353
5,329
5,283
5,254
5,209
5,247
5,256
5,191
5,267
5,321
5,321
5,314
5,277

5,216
5,222
5,215
5,189
5,210
5,201
5,254
5,211
5,167
5,018
5,115
4,968
4,984
4,939
4,934
4,870
4,875
4,879
4,796
4,889
4,955
4,843
4,863
4,906
4,932
5,005
4,964
4,896
4,911
4,797
4,869
4,887
5,035
5,044
5,097
5,016

5,118
5,105
5,070
5,174
5,051
5,115
5,097
5,102
5,159
5,107
5,149
5,149
5,191
5,284
5,299
5,310
5,297
5,325
5,284
5,287
5,315
5,240
5,243
5,232
5,228
5,199
5,250
5,234
5,163
5,129
5,118
5,126
5,124
5,130
5,215
5,221

5,233
5,196
5,261
5,295
5,345
5,348
5,308
5,316
5,343
5,386
5,369
5,369
5,396
5,426
5,393
5,388
5,348
5,344
5,269
5,298
5,277
5,249
5,244
5,218
5,309
5,344
5,362
5,336
5,404
5,435
5,528

h will work as follows:

es above the 200 dma - buy 1 unit
es below the 100 dma - sell 1 unit
se 200, 100 days so that you can change these days as you like

ales, profits

ay 20% discounting rate

VBA EXERCISES
1 Fill up rows 1 to 10 diagonally with numbers 1 to 10
2 Fill up rows 1 to 10 and columns 1 to 10 with numbers 51 to 100 (in any order)
3 Given 10 sales persons and 10 sales figures, comment in the adjacent column "Gr
relevant rows in special color, for those sales persons who have performed well
4 Create a tree (triangular) with first row 10 columns, second row 9 columns and so
Let the first number be 100, the other numbers increasing by 5% for each column
Let the first number in the next row be 95 (5% less than 100), again increasing by
Binomial model for option valuation
u
105.00%
5%
d = 1/u
95.24%
Steps
Share Price Tree

0
100.00

1
105.00
95.24

2
110.25
100.00
90.70

Options - Call Option

You choose a strike price (say 100)
You buy the option for a price (premium) (10)
On the last day, you will get the upside if any

3
115.76
105.00
95.24
86.38

4
121.55
110.25
100.00
90.70
82.27

If the price goes to 162.89, you will get 6

Your gain would have been 52.89 (62.89
An option is a right (not an obligation)
Right to what
Right to receive the upside
Upside over what
Upside over the strike price
If the price closes below 100, then you g
Lottery

If I had chosen a strike of 110, what would be the implication

I would get lesser payoff on expiry

The price of the 110 call would be lower than that of the 100 call

Steps
Call Option Price
Strike
100.00

0
7.81

1
10.74
4.64

2
14.42
6.76
2.34

3
18.85
9.62
3.67
0.90

4
23.97
13.30
5.62
1.55
0.20

If you were an option seller and you sold this option for 7.81, and you offered to pay the up
If you sold the option for 7.81 and the price went to 162.89, and you had to pay 62.89, how
Steps
Option Delta

0
0.625

1
0.747
0.475

2
0.858
0.609
0.312

3
0.944
0.749
0.438
0.160

4
0.996
0.877
0.592
0.252
0.049

The change in the price of the option given a change in the share price
If the share price were to change by USD 1.00, how much will the option price change (how
What is the practical significance of delta
If your delta is 0.625, then holding 1 option is equivalent to holding 0.625 shares
1 option = 0.625 shares

The option seller will buy 0.625 shares on day zero - this is the hedge against the option so
End of month 1 - share may go to either 105.00 or 95.24
The relevant delta levels are 0.747 or 0.475
If the price goes to 105.00 the delta will rise up to 0.747

0.747
0.625
0.122

If the price down to 95.24 the delta will rise fall to 0.475

0.475
0.625
-0.150

Number of paths = 2^Steps

Simulation
Steps
Random (1 Down, 0 Up)
Cumulative Random
Share Price Path
Relevant Call Delta

100.00
0.625

Action - Buy/(Sell)
Cash Flow
-

10

1024

1
0
0

2
1
1

3
0
1

105.00
0.747

0.625
62.53 -

0.122 12.79

100.00
0.609
0.138
13.78 -

Opt Prem HedGain Payout

7.81 5.43
Test
Opt Prem
7.812394
7.812394
7.812394
7.812394
7.812394
7.812394

105.00
0.749
0.140
14.68 -

Net Net
2.38

HedGain Payout
Net Net
4.896383
-10.25 2.458776
5.572137
-10.25 3.13453
5.271114
-10.25 2.833508
-6.16927
0 1.643125
-6.37603
0 1.436363
-6.22199
0 1.590401

4
0
1
110.25
0.877
0.127
14.05

7.812394
7.812394
7.812394
7.812394
7.812394
7.812394
7.812394
7.812394
7.812394
7.812394
7.812394
7.812394
7.812394
7.812394
7.812394
7.812394
7.812394
7.812394
7.812394
7.812394
7.812394
7.812394
7.812394
7.812394
7.812394
7.812394
7.812394
7.812394
7.812394
7.812394
7.812394
7.812394
7.812394
7.812394
7.812394
7.812394
7.812394
7.812394
7.812394

5.046282
-6.11877
16.63524
-7.19898
-6.7478
-6.47665
-7.02192
4.587666
-6.95079
43.53871
-5.41707
-6.44511
15.63882
-7.01959
28.66018
-5.42231
-7.3287
5.572137
16.84929
43.23108
5.475743
-4.84497
-6.19299
-6.9194
17.01464
-6.69856
16.73948
-6.80281
-6.47665
-7.05503
3.954497
5.237289
-6.9194
-5.86581
-6.64355
-5.23754
16.87276
-7.01818
17.01487

-10.25
0
-21.5506
0
0
0
0
-10.25
0
-47.7455
0
0
-21.5506
0
-34.0096
0
0
-10.25
-21.5506
-47.7455
-10.25
0
0
0
-21.5506
0
-21.5506
0
0
0
-10.25
-10.25
0
0
0
0
-21.5506
0
-21.5506

2.608676
1.693624
2.897007
0.613417
1.064594
1.335744
0.790478
2.15006
0.861606
3.605559
2.395322
1.36728
1.900587
0.792808
2.463005
2.390087
0.483694
3.13453
3.111057
3.297933
3.038137
2.967427
1.619407
0.892994
3.276405
1.11383
3.001252
1.009585
1.335744
0.757362
1.51689
2.799683
0.892994
1.946585
1.168839
2.574851
3.13453
0.794212
3.27664

7.812394
7.812394
7.812394
7.812394
7.812394
7.812394
7.812394
7.812394
7.812394
7.812394
7.812394
7.812394
7.812394
7.812394
7.812394
7.812394
7.812394
7.812394
7.812394
7.812394
7.812394
7.812394
7.812394
7.812394
7.812394
7.812394
7.812394
7.812394
7.812394
7.812394
7.812394
7.812394
7.812394
7.812394
7.812394
7.812394
7.812394
7.812394
7.812394

-5.85836
-6.58249
-6.25417
-6.71358
-5.50854
-6.08874
-7.01959
-6.95079
-7.11115
16.46328
-6.54763
-6.32166
5.162928
-6.45162
-6.32904
-7.30457
-7.10974
4.553841
-6.81515
-6.43773
-6.90439
4.794427
-6.72359
-6.44511
-6.71358
-6.81515
-6.54763
16.76976
-7.02192
16.94172
4.596443
-6.44511
29.60391
-7.3287
-7.05503
-7.24538
-7.00863
3.923763
-6.71333

0
0
0
0
0
0
0
0
0
-21.5506
0
0
-10.25
0
0
0
0
-10.25
0
0
0
-10.25
0
0
0
0
0
-21.5506
0
-21.5506
-10.25
0
-34.0096
0
0
0
0
-10.25
0

1.954031
1.229904
1.558226
1.098817
2.303857
1.723651
0.792808
0.861606
0.701246
2.725051
1.264763
1.490736
2.725322
1.360773
1.483354
0.507822
0.702649
2.116235
0.997239
1.374662
0.908007
2.356821
1.088801
1.36728
1.098817
0.997239
1.264763
3.031529
0.790478
3.203485
2.158836
1.36728
3.406738
0.483694
0.757362
0.567017
0.803762
1.486157
1.099062

7.812394
7.812394
7.812394
7.812394
7.812394
7.812394
7.812394
7.812394
7.812394
7.812394
7.812394
7.812394
7.812394
7.812394
7.812394
7.812394
7.812394
7.812394
7.812394
7.812394
7.812394
7.812394
7.812394

-6.6255
16.90839
-6.49326
29.10076
-6.91707
-7.05503
5.128832
16.60191
-6.18841
-5.72886
-6.47665
-7.00863
-6.68673
-7.3287
4.671044
-6.54198
4.659215
-5.60545
29.4813
-7.11115
-5.08707
-7.10741
-6.47665

0
-21.5506
0
-34.0096
0
0
-10.25
-21.5506
0
0
0
0
0
0
-10.25
0
-10.25
0
-34.0096
0
0
0
0

1.18689
3.170158
1.319136
2.903589
0.895325
0.757362
2.691226
2.86368
1.623986
2.083538
1.335744
0.803762
1.125659
0.483694
2.233438
1.270417
2.221608
2.206947
3.284131
0.701246
2.725322
0.70498
1.335744

umbers 51 to 100 (in any order)

mment in the adjacent column "Great Work" and color the
persons who have performed well
umns, second row 9 columns and so on
s increasing by 5% for each column to the right
less than 100), again increasing by 5% in each column to the right

5
127.63
115.76
105.00
95.24
86.38
78.35

6
134.01
121.55
110.25
100.00
90.70
82.27
74.62

7
140.71
127.63
115.76
105.00
95.24
86.38
78.35
71.07

8
147.75
134.01
121.55
110.25
100.00
90.70
82.27
74.62
67.68

9
155.13
140.71
127.63
115.76
105.00
95.24
86.38
78.35
71.07
64.46

price goes to 162.89, you will get 62.89 (162.89 minus strike 100)
ain would have been 52.89 (62.89 minus 10)
tion is a right (not an obligation)

to receive the upside

e over the strike price

price closes below 100, then you get nothing (that 10 is lost)

10
162.89
147.75
134.01
121.55
110.25
100.00
90.70
82.27
74.62
67.68
61.39

5
29.65
17.83
8.40
2.62
0.39
-

6
35.70
23.09
12.14
4.34
0.75
-

7
42.04
28.84
16.86
7.02
1.44
-

8
48.68
34.85
22.32
10.94
2.77
-

9
55.62
41.15
28.03
16.13
5.33
-

10
62.89
47.75
34.01
21.55
10.25
-

7.81, and you offered to pay the upside over 100 (after 10 months), you would be okay
.89, and you had to pay 62.89, how is this okay
5
1.013
0.969
0.760
0.387
0.089
-

6
1.009
1.009
0.914
0.572
0.163
-

7
1.006
1.006
1.006
0.797
0.298
-

8
1.003
1.003
1.003
1.003
0.546
-

9
1.000
1.000
1.000
1.000
1.000
-

he share price
h will the option price change (how responsive is the option price)

to holding 0.625 shares

10

is the hedge against the option sold by him

He will buy this much more shares

He will sell so many shares

5
1
2
105.00
0.760
-

0.116 12.21

6
1
3
100.00
0.572
0.189
18.87 -

7
0
3
105.00
0.797
0.226 23.70

8
1
4
100.00
0.546
0.251
25.13 -

9
0
4
105.00
1.000

10
1
5
100.00
-

0.454 - 1.000
47.67
100.00 -

5.43

Imposed
Prob (u)
52%
Prob (d)
48%

would be okay

Pair trading exercise

Pick up any of the following pairs
1
2
3
4
5
6
7
8
9
10

HUL and ITC

SBI and PNB
BoB and BoI
OBC and BankNifty
Maruti and M&M
Bajaj Auto and Hero Honda
ICICI Bank and HDFC Bank
Ambuja Cement and Ultra Tech Cement
Tata Steel and SAIL
Cipla and Ranbaxy

Relative reward and risk

Pair trading strategy

Download daily closing prices for the last 5 years

Adjust the prices for any bonus / splits
Work out the share price ratio each day
Determine maximum and minimum limits of the share price ratio
Determine standard deviation of the movement
Determine reasonable buy / sell signals for relative trading
Compute the number of shares to buy / sell at each signal and square off
Keep track of gains / losses every day (realized and unrealized)
Parameterize all signals such that these are amenable to Sensitivity
Determine ideal / optimum buy / sell signals from your model

elative reward and risk

air trading strategy

square off