The Front End

The assumptions tab: one home for every input

Every number you choose belongs in one labelled, organised place.

The assumptions tab is the steering wheel of the model. Every value you choose — growth rates, margins, tax rate, working-capital days, payout policy — lives here, grouped logically and clearly labelled. The rest of the model only references these cells; it never contains a hard-coded input. This is the discipline from Unit 1 made concrete.

• Group assumptions by driver: revenue, costs, capital intensity, financing, returns.
• Label every input with units (%, days, $m) so there is no ambiguity.
• Colour-code inputs distinctly from calculated cells — a near-universal convention is blue font for hard-coded inputs.
• Keep one source of truth: if a number is used in five places, it is entered once and referenced five times.

The blue-font convention On a Wall Street desk, blue font means 'this is an input you can change' and black means 'this is a formula — don't touch.' It lets anyone open your model and instantly see what's drivable.

Formatting that signals trust

Cover page, titles, headers/footers, and consistent number formats make a model credible.

Presentation is not vanity. A clean cover page, centred section titles, consistent number formatting, and proper headers and footers tell the reader that the person who built the model is careful — and careful modellers make fewer mistakes. Sloppy formatting invites doubt about the numbers themselves.

The conventions that matter

• A cover page with the company, the analyst, the date, and a one-line thesis.
• Centred titles across the print area (in Excel, 'Center Across Selection' rather than merged cells, which break formulas).
• Consistent number formats: thousands separators, one decimal discipline, parentheses or red for negatives.
• Headers and footers with the company name, tab name, and page numbers for printed output.

Why presentation = credibility A model is a communication tool. If a reader trips over inconsistent formatting, they stop trusting the analysis. Consistency is a proxy for rigour.

Scenarios and the live case

Drive Base / Bull / Bear from a single switch instead of editing inputs by hand.

A serious model doesn't have one set of assumptions — it has several cases (Base, Bull, Bear) and a way to switch between them instantly. The 'live case' is the set of assumptions currently feeding the model. The CFA course teaches four common ways to build this switch in Excel.

1. Store each scenario's inputs in its own column (Base, Bull, Bear).
2. Add a single selector cell — the scenario switch — usually a data-validation dropdown or combo box.
3. Use a lookup (CHOOSE, INDEX/MATCH, OFFSET, or a simple IF) to pull the selected scenario's column into the 'live case' that the model references.
4. Now flipping one cell re-prices the entire model.

Combo boxes and data validation The combo box (or a data-validation dropdown) is just a friendly way to set the switch cell. The magic is the lookup behind it — the control itself does nothing on its own.

The executive summary

A one-screen story: thesis, key drivers, and the headline outputs.

The executive summary is the one page a busy reader actually looks at. It states the thesis, surfaces the handful of assumptions that matter, and shows the headline outputs — revenue and EPS trajectory, free cash flow, and the valuation conclusion. Everything else in the model exists to support this page.

• Lead with the conclusion, not the methodology.
• Show the two or three assumptions the answer is most sensitive to.
• Pair every output with the case it came from (Base / Bull / Bear).
• Keep it to a single screen or page.

Always live, never stale In Excel the summary is wired by hand and quietly drifts out of date. In the tool the summary and charts are generated from the live model, so they update the instant you change an assumption or flip a scenario.