After Editing - Structure Check
- 02:18
Explaining the structure check after each model edit, keeping the model structure consistent and easy to audit
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A structure check asks you to check for consistent period columns. So for instance in this table in column F we can see that the balance sheet has year 1 figures, the income statement has year 1 figures, and your operating statistics also have year 1 figures. Column F only has year one figures in it. If I was writing an operating statistic in column F, I might be expected to link up to figures in the income statement and balance sheet column f as well. If I suddenly saw a g reference or an h reference or j reference, you might start asking hang on. Why do I have an operating statistic in year one that's linking to a selling year 5? So this ensures consistency of formulas. When we're looking at percentage of formula i.e., you're looking at 5% off sales. You'd expect to have the same column references. If I'm doing my receivables in column f I might be linking up to a percentage of sales both of them in column f. However, if I'm doing a growth percentage, a growth percentage has this period and the last period reference as well because I'm going to be taking my growth assumption in this year and then adding it onto last periods figure, last period sales for instance now being grown. We also want to make sure we have consistent row labels. So in my assumptions, you might notice here we've got receivables at the top and inventories underneath and in the balance sheet we have them in the same order. This makes inconsistent formulas more obvious to see. another check is seeing in your final period that you've got a zero this suggests that you should check for structure issues in period one. So if I try to write my sales in period one in column f and I accidentally linked to my assumption in column g in year 2 as I copy that to the right maybe a 10 year model in their 10th year. I'd be trying to get my assumption from you 11 but year 11 is blank because it's a 10 year model, hence we end up with a 0. So 0 in the final period are red flag. It suggests that in period one. You linked to the wrong column. You probably linked to one column to the right.