Comments on: Line Summaries – get the big picture! http://www.fimodo.com/2009/07/line-summaries-%e2%80%93-get-the-big-picture/ Financial Modelling Experts sharing their knowledge Wed, 08 Sep 2010 11:57:06 -0700 http://wordpress.org/?v=2.8.2 hourly 1 By: Gavin Townshend http://www.fimodo.com/2009/07/line-summaries-%e2%80%93-get-the-big-picture/comment-page-1/#comment-292 Gavin Townshend Mon, 11 Jan 2010 18:16:14 +0000 http://www.fimodo.com/?p=307#comment-292 I have seen that "line summaries" as described in this article is becoming a more common practice, which is a good thing. One thing that has often puzzled me (and the same applies to the example illustrated in the article) is "Why are the opening and closing balances not included in the summary?" I don't mean adding up all the opening and closing balances, but including the opening balance, and calculating the final closing balance (the grey hashed cell in the example) using the same formula as in each period. The final closing balance can then be checked against the balance calculated in the last model period. In many projects where there is no opening balance sheet and all balance sheet items clear out to zero by the project end, showing the opening closing figures this doesn't make much difference as they would both be zero. But if there is an opening balance sheet and/or closing balance sheet, overall sense checking and debugging will be easier. It also means that balances at the end of the model are far more evident as users do not need to scroll all the way to the right to see final balances. I have seen that “line summaries” as described in this article is becoming a more common practice, which is a good thing.

One thing that has often puzzled me (and the same applies to the example illustrated in the article) is “Why are the opening and closing balances not included in the summary?”

I don’t mean adding up all the opening and closing balances, but including the opening balance, and calculating the final closing balance (the grey hashed cell in the example) using the same formula as in each period. The final closing balance can then be checked against the balance calculated in the last model period.

In many projects where there is no opening balance sheet and all balance sheet items clear out to zero by the project end, showing the opening closing figures this doesn’t make much difference as they would both be zero.

But if there is an opening balance sheet and/or closing balance sheet, overall sense checking and debugging will be easier.

It also means that balances at the end of the model are far more evident as users do not need to scroll all the way to the right to see final balances.

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