You can see here that we forecast the shareholders' equity for Generali, but we haven't yet put that equity into our balance sheet. Now, before we do this, let's have a think about what would happen if we did. So if we put equity into our balance sheet, that would increase total liabilities and equity but this would then increase the investment balances as these are treated as a residual item in the balance sheet. But if the investment balance is increased, then this increases the investment returns in our income statement and this then increases our net income figure and therefore, our ending equity balance. So the whole process becomes circular and we would have a circular reference in our model. Now, this in itself isn't a problem as long as we manage it carefully, and this is because we want to make sure that we have the ability to turn a circular reference on or off when we're editing the model to avoid the model becoming unstable if we create an error. Therefore, the best practice technique is to use a circular switch when we're putting the equity into the balance sheet. So let's do that now.

Now, when we're using a circular switch, we use an IF function, and that tells the model that if the switch is set to one and therefore on, it should grab the shareholders' equity figure from the calculations above. Else it should return a zero value. So we've done that and it's now returning a zero value. So that tells us that the switch is currently off. Now, let's roll forward that calculation to the end of our forecast period, and then we're gonna need to work out how we can turn the switch on. Now, in order to turn it on, we need to know where the switch is. So where is it hiding in our model? Well, if you scroll to the previous tab of our model, the info tab, you can see that actually, the switch is hiding here. And in fact, if you look to the top left of your screen, you'll see that the switch is actually sitting in a named cell. So it's named Switch. And that means that when we reference that cell in our IF function, Excel knows to look to this cell. Now, as you can see, the switch is set to zero at the moment, so the switch is off. But before we turn it on, we need to change our Excel settings 'cause we need to allow Excel to compute iterative calculations. And we do that using our shortcut Alt + F + T, and down to the formula section. And then we turn on the iterative settings And now we can turn the circular switch on. Now let's go back to our model and see what's happening there. Now you can see that the shareholder's equity is returning the figure from the calculations above. And if we wanted to remove those, we could just go back and turn the switch off. So now that we've turned the switch on, we can see the shareholders' equity in the model. And if we zoom out, we can see that we've now finished building our model for Generali.