Managing Complex Models with Structure with Christopher Reilly
Welcome to the Financial Modeler's Corner (FMC), where we discuss the Art and Science of Financial Modeling with your host Paul Barnhurst.
Financial Modeler's Corner is sponsored by the Financial Modeling Institute (FMI), the most respected accreditation in Financial Modeling globally.
In this episode of the Financial Modelers Corner, host Paul Barnhurst delves into the intricate world of financial modeling with returning guest Christopher Reilly. The conversation centers around what is necessary to build robust financial models, highlighting the importance of three-statement models and cash flow forecasting. The episode is filled with practical insights, advanced techniques, and professional experiences that underscore the significance of simplicity, accuracy, and best practices in financial modeling.
Christopher Reilly is a seasoned financial modeler with extensive experience in consulting, private equity, and financial modeling education. Starting his career during the financial crisis, Christopher worked on high-profile bankruptcies such as Lehman Brothers and Rescap. His journey took him from a senior analyst role at Hilton Worldwide to middle-market private equity, and eventually to founding his own financial modeling education business. Today, he focuses on teaching and building financial models, with his work being featured by Wharton Online, Wall Street Prep, and LinkedIn Learning among others.
Key takeaways from this week's episode include:
The importance of simplicity in financial models and how over-complicating can hinder their effectiveness.
Practical steps and considerations for building robust three-statement financial models.
Tips for auditing models to ensure accuracy and integrity.
How to use advanced Excel functions and shortcuts to enhance modeling efficiency.
Insights into the role of AI in financial modeling and how it may shape the future of the profession.
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In today’s episode:
[01:11] - Paul introduces the episode and welcomes back Christopher Reilly.
[02:31] - Christopher shares a story about a complex healthcare deal model that required significant simplification.
[03:55] - Discussion on the importance of keeping models simple and useful.
[05:01] - Christopher talks about his career journey and experiences over the past year.
[08:31] - Christopher explains why he is passionate about teaching financial modeling.
[11:43] - Why every finance professional should understand how to build a three-statement model.
[14:20] - Steps to take when beginning to build a three-statement model.
[22:17] - Tips on structuring models vertically and building essential checks to ensure accuracy.
[28:07] - How to effectively use support schedules and detailed assumptions in modeling.
[32:36] - Essential tips for error checking, building support schedules, and maintaining model integrity.
[39:10] - Key Excel formulas and functions necessary for building financial models.
[46:58] - Discussion on the potential impact of AI on financial modeling and its future integration.
[49:53] - Final thoughts and details on Christopher Reilly’s courses and where to find them.
Full Show Transcript
[00:00:00] Host: Paul Barnhurst: I know you have a horror story. Worst model you've worked on or worst modeling you've seen?
[00:00:05] Guest: Christopher Reilly: I've built plenty of horrible models, but one that comes to mind was a healthcare deal that I was doing this probably 6 or 7 years ago.
[00:00:12] Host: Paul Barnhurst: I spent my whole career with large companies. I didn't build my first three statement model for work till I started my own consulting.
[00:00:23] Guest: Christopher Reilly: So I'll make sure I get the EBITDA built there and I'll build the trailing 12 month EBITDA, because that number is going to be needed for a handful of things. Everything else in the balance sheet can be a hard coded number. All my working capital, all my fixed assets, all my debt can be static.
[00:00:37] Host: Paul Barnhurst: What are some of those other you mentioned a few tips. Any other kind of top tips or tricks that you'd recommend?
[00:00:42] Guest: Christopher Reilly: I would say to try to keep the model all in one place, and then create your summaries and your print friendly stuff somewhere else.
[00:00:55] Host: Paul Barnhurst: Welcome to Financial Modelers Corner, where we discuss the art and science of financial modeling with your host, Paul Barnhurst. Financial Modelers Corner is sponsored by Financial Modeling Institute. Welcome to Financial Modelers Corner. I am your host, Paul Barnhurst. This podcast is where we talk all about the art and the science of financial modeling. With distinguished financial modelers from around the globe. The Financial Modelers Corner podcast is brought to you by the Financial Modeling Institute. FMI offers the most respected accreditations in financial modeling. I'm thrilled to welcome back to the show, Chris Riley. Chris, welcome back to the show.
[00:01:44] Guest: Christopher Reilly: Thank you. Paul, I am thrilled to be back. A recurring guest at it's a privilege. I'm honored. Thank you. Well, we're.
[00:01:49] Host: Paul Barnhurst: Excited to have you. Everybody loved your last episode, so we figured it was time to do it again. It's been, what, about a year?
[00:01:54] Guest: Christopher Reilly: Amazing that it has, but yeah, sounds about right. Well, I'm thrilled to be here. Yeah, because we.
[00:01:58] Host: Paul Barnhurst: Launched the show in June, and I think you were the fourth or fifth episode. So yeah, just probably about 11, 11, 12 months.
[00:02:05] Guest: Christopher Reilly: I'm glad to be back.
[00:02:06] Host: Paul Barnhurst: All right. Well, we're gonna ask a couple questions that we asked you to before. For the most part, we're really going to dig into three statement. You do a ton of education around there and we want to get your thoughts. But before we get to that we're going to go do a little bit of your background. And before your background I'm going to ask the question. I ask every guest, I know you have a horror story, worst model you've worked on or worst model you've seen?
[00:02:30] Guest: Christopher Reilly: So last time I was on, I told you about a terrible model that I built. So I'll spare you that story. But I've built plenty of horrible models, and I just want to make that clear, you know? And I started that way, and, yeah, I'm a little better now, but I've built plenty of bad ones. But one that comes to mind was a healthcare deal that I was doing this probably 6 or 7 years ago, where it had just thousands and thousands and thousands of rows trying to predict population data so that the main inputs were you'd enter them somewhere down on row 6 or 7000, and it was just the most clunky, irritating model that I'd ever looked at. And I actually called in some of my other colleagues and sort of rage scrawled down the whole thing just to show them how how bad it was. And it was trying to be sophisticated. It was actually built by somebody in big four accounting, which is not to knock big four. It just goes to show that sometimes you can you can over model stuff, trying to show your expertise when really you're actually hurting the client. And so after I got through my, my fit of rage going through that thing, I actually rebuilt it just on a couple tabs, and we greatly simplified the drivers. And was it just as precise? Maybe. Maybe not. But the client liked it a lot more. It was something that they could understand, and it became the go to model that we used for their pitch deck. So never forgot that one. Literally 7000 rows to scroll through.
[00:03:55] Host: Paul Barnhurst: At some point, you got to realize that the complexity is not worth the perceived accuracy. And I say perceived because most studies have found really complex models are rarely more accurate than others. Because we're going to be wrong no matter what. One of my favorite quotes is, uh, George box, right? All models are wrong. Some are useful. And if it's too complicated, it's not useful. So why not be wrong and keep it simple?
[00:04:25] Guest: Christopher Reilly: I like that philosophy. I'm going to put that on my website.
[00:04:29] Host: Paul Barnhurst: Go for it. I'll all yours. So, yeah, I get it. And I build plenty of complex models. I mean, I'm calling the the kettle the pot here, black, as the saying goes in that I tend to overcomplicate. But the older I get, the more I learn. I'm like, I just gotta be better at keeping it simple. Why do I make it so hard on myself? Well, I.
[00:04:47] Guest: Christopher Reilly: Think we we all learn that the hard way, myself included.
[00:04:51] Host: Paul Barnhurst: I do. I think, especially at first. Sometimes you think complex means fancy. And no, it doesn't, doesn't lead to that necessarily. So why don't you start by just sharing your background with us and then what you've been up to over the last year, what have you done over the last year since the last time we had you on the show? Sure.
[00:05:10] Guest: Christopher Reilly: So the the 32nd overview on me started in consulting during the financial crisis with FTI REIT in New York City, worked on the Lehman Brothers bankruptcy, worked on the Rescap bankruptcy, and a bunch of other high profile ones at the time. And then I jumped over to a bit of a Treasury or FP&A role, even though most people weren't calling it FP&A back then. This was for Hilton Worldwide, and I helped them build a model to go public. They were owned by Blackstone at the time, and when I got some exposure to Blackstone is when I got really interested in private equity. And so I went down the rabbit hole a little bit, researched it myself, taught myself to build LBO models, and reached out to a bunch of companies out here in Denver to see if somebody would basically take a chance on me, given my nontraditional background. And one company did, and they liked my modeling skills, and they liked the consulting and the Hilton background. And so I did middle market private equity for almost a decade. I went to two different shops. They've all split and kind of gone their separate ways now. And then in right around 2020, I decided I wanted to double down on my favorite skill, which was building these financial models. For some reason, I just had an intrinsic interest in seeing how all the pieces fit together, and I really enjoyed it. And so I said, can I build a business around this? I did some consulting for a while, probably almost two years, and then I got into more of the education side. The content side around teaching financial modeling released a couple courses, and that's pretty much what I do today. I'm more on the education business and from last time we chatted until now, I've really doubled down on three statement modeling specifically, as well as 13 week cash flow modeling. And I've been fortunate enough to have some of my content featured by Wharton Online and Wall Street Prep and LinkedIn learning in the last year. So I've received a lot of validation for the education that I've created, and that's what I'm doing today.
[00:07:06] Host: Paul Barnhurst: So Wharton, Wall Street and LinkedIn, no big deal. I'm kidding. Congratulations on that. That's really exciting for you. Those are some big names. I think the first time you and I chatted was about three years ago. Now almost.
[00:07:19] Guest: Christopher Reilly: It's it's been a while. You were kind enough to.
[00:07:21] Host: Paul Barnhurst: Consulting, if I remember right. Almost all your business at that point.
[00:07:25] Guest: Christopher Reilly: Yes. You were kind enough to reach out to me and give me the time of day, so I appreciate that. And, uh, it's changed since then, but yes, it's been about. Yeah. Three years. Can't believe it.
[00:07:34] Host: Paul Barnhurst: Has been three years. I know we've talked about that journey of being a solopreneur. And as you try to figure out the right path and revenue and all those things, that's probably for another podcast. But we definitely could tell some war stories, so to speak, in that area.
[00:07:48] Guest: Christopher Reilly: That's for sure.
[00:07:49] Host: Paul Barnhurst: All right. I want to ask one more question. And then we're going to jump into the three statement model because I know that's your bread and butter. That's really where you focus. And I think a lot of people struggle with building three statement models. I'm sure you've seen lots of them where you're like, all right, if they would just learn design or if they just understood these principles, it's not that it's a bad model, it's just it's not. They're missing some things to make it a good model, if that makes sense. So before we do that, first question I want to ask is why are you so passionate about modeling education? You start mostly doing consulting, building a lot of models. You mentioned how much you like seeing the three statements stick together, but what is it about training others that you enjoy? Why does that get you excited?
[00:08:30] Guest: Christopher Reilly: So the reason I enjoy the training is and this is going to sound cliche, but when I get responses from students that say that the work that I've done for them has really helped them improve, that really means a lot to me. And so that that gets me really excited. I like to make sure that I'm available to students. So I don't I don't outsource or anything. I, you know, it's not the best use of my time from like a pure optimization standpoint, but I like to be available and reachable, and I feel like people can build a relationship with me as a student. And so there's a there's just something more tangible there than just an online course. And so as we communicate and then they say that my work has had an impact on them, that really means the most at the end of the day. And that kind of keeps me, that keeps me going. So that's the that's the business and customer side of it that I really enjoy. And then on the technical side, I just enjoy putting them together. I like building the models. I like seeing how the pieces fit. I've always had an interest in that. I don't frankly know why. You know, I didn't grow up that way. I just kind of developed that interest on the job, and I like to see the whole system and how it flows together in a properly structured model. And when clients see that on their end, because I still do some client work, the almost the relief or the clarity that they have when they know what to do next, based on this file that I've built is a really satisfying and fulfilling feeling. So it's kind of a combination of all those those three things.
[00:10:04] Host: Paul Barnhurst: Sure. You enjoy teaching, you enjoy the challenge of putting together the models, but you love the fact that you can make a difference for others. When people are like, wow, that really helped me. Or you know, they're appreciative and it's making work easier. Like maybe they're going home at six instead of ten, whatever it might be. You know what I mean? Because there's times when we've all done it, when you don't know what you're doing, you spend four times as long doing something right.
[00:10:30] Guest: Christopher Reilly: No. Exactly. And I think just giving giving people that clarity is really helpful. And I think the important thing to drive home with the model and we'll talk about this a little bit more, but that the model is not necessarily something that has to be overly intricate or complicated. And the model is not the business itself. It's designed to help the operations team know what they have to do. And so when it comes to basic stuff like cash flow modeling, I get a lot of satisfaction out of just helping the client know that the next thing we have to do is go call this customer and make sure that we collect on our R, and the financial model gave us that blueprint.
[00:11:08] Host: Paul Barnhurst: I'm laughing because I've just had a number recently, or I've had a few get long on the R side and had to call them like, where is it? And one of them's like, oh, I just lost it in my email. You know, you're just like, oh, thanks, because I do care about my cash flow. I'm a business of one, you realize. But I kind of laugh when you said that because that's that's been a little bit of a theme the last week or two is just trying to get a few things that have extended longer than I'd like paid. You really have to understand that it's huge. It's a big difference. So let's jump into the three statement. First question I'd like to ask you. Why are you such a big fan of the three statement? Why do you think finance professionals need to learn how to build a three statement model?
[00:11:49] Guest: Christopher Reilly: So the reason I'm so passionate about it is because if you understand how to do it, you understand the building blocks of pretty much any business and some accounting law. You know, rules will change company to company based on the industry that they're in. But if you know how the pieces fit together, you can modify those accounting structures and you can ultimately give the business guidance. And so once you understand that universe, you go from just becoming an Excel person to a strategic thinking person, more like a CFO and somebody who can give advice. And if you know in your head how those three statements work together, when somebody says, well, what happens if margin is going to drop by a few points, You can do that math in your head and know that it's going to it's going to hurt the net income, it's going to hurt the cash. And that's going to create some kind of pinch down the road in theory. And it's from knowing the interconnectivity of those things. And so I feel like if you have that grasp then you can be a real business partner. And that in my mind, separates junior professionals from more senior ones.
[00:12:53] Host: Paul Barnhurst: Okay, I'm going to play a little bit of devil's advocate. Not that I disagree, but you know, my experience, I spent my whole career with large companies. I didn't build my first three statement model for work till I started my own consulting. But I did understand the three statements right. I think you have to understand those. So as your belief is the best way to understand those is to build the model. Or do you think every finance professional should really be able to build the three statement model, or how do you how do you reconcile that? Because I've you know, I definitely am a little different on that just because I never had to build them for my career. But I had to I understood the impact. Right? Yeah.
[00:13:29] Guest: Christopher Reilly: I'm glad you brought that up. So I think understanding it is the most important part. And I just think building them is the easiest way to understand it.
[00:13:37] Host: Paul Barnhurst: And don't disagree with that. I would agree building them is the best way because you get that practice, you really see how they interact. Frankly, I wish I had built some earlier in my career, but sometimes I hear like, not you, but I heard someone one time say the number one thing every FP&A professional has to do is build a three statement model and I respond with, haven't built one yet in my career and I've done okay in FP&A and they kind of like, oh, because they were all startup. And so I like to kind of help people know you. You have to understand three statements. I 100% agree with you. How you do that can be different depending on the size of company you work with. But being able to build a three statement model I think is extremely valuable. That's kind of my nuance on that. Yeah.
[00:14:19] Guest: Christopher Reilly: Makes sense.
[00:14:19] Host: Paul Barnhurst: All right. So next question. How should someone get started. You know, if they really don't have an idea they got to build a three statement model. Boss comes and say, hey, I want one tomorrow. What what advice would you give them? Let's start there. If they're kind of trying to figure that out, how do they get started?
[00:14:35] Guest: Christopher Reilly: So the first thing you need to ask for is some history. And if you have no history, that's I guess that's a different scenario. So we'll we'll assume this company has some operating history. You just want to get that information by month in spreadsheet format. So let's just assume you can get two years of history of the income statement and the balance sheet by month. So you have to start there. And then step two is I prefer something called vertical modeling, which we'll talk about a little bit more, where we stack the statements on top of each other so that along the top of your model you just have the dates. And then below that you've got the income statement. And then right below that you have the balance sheet so that everything is aligned in a time period. So that's your request list the income statement and the balance sheet historically. And then the very next thing I will do is I will build the historical cash flow statement. And we can talk about how to do that. But that would be the next step. We build it so that if I can get my cash flow statement to reconcile historically, then I know when I switch over to forecast mode, it's going to work properly. And that's the whole point, because one of the main outputs of a three statement model is roughly what is cash going to be over the next several months. And so I want to make sure the integrity of the cash flow statement works because I have accurate historical financials. So that's kind of where I would start.
[00:15:59] Host: Paul Barnhurst: And how often is it right. Like the first time does the cash balance. Or are you usually having to go back and ask a question real world. Like how often when you're dealing with companies on that first try, does the cash all balance?
[00:16:12] Guest: Christopher Reilly: So if the balance sheet balances, which it should if it comes out of something like QuickBooks, right. That's I bet I check that I check it every time there's the balance sheet balance. Step one. That's good. And then I check does the change in the retained earnings match the net income in the corresponding period less any distributions. And there's not usually I don't count a ton of distributions. So if it balances and the net income matches that I'm pretty confident the cash flow statement is going to work. So I would actually say 90% of the time, if I get financials that come out of a accounting system, I can get the cash flow, which makes.
[00:16:46] Host: Paul Barnhurst: Sense because they're doing double entry accounting. So everything should tie out in theory.
[00:16:51] Guest: Christopher Reilly: In theory, but sometimes it doesn't. But I would say 90, 95% of the time it works fine.
[00:16:56] Host: Paul Barnhurst: Okay. Just curious because I know there's there's real world. I know cash flow is often balance sheets and more in the forecasting. You see the plugs than the historical right. Although I had one model where yeah, it was millions of dollars and I think I was, it was a few thousand every couple of months that were just being off after they went to a new accounting system. And I'm like, I'm plugging it to the cat. It's like, I'm not going to spend a bunch of time on this. They don't care. It's not material. I'm moving on. And I didn't put a plug in the balance you put an unreconciled line. I think that's important for people to recognize. If you do have some reason, you have to do that. Call it out, make it very clear what you're doing. Don't just plug a number and force it all to balance. And nobody knows how you balanced it.
[00:17:38] Guest: Christopher Reilly: Yeah, that'll come back to bite you later. And that's another lesson I learned the hard way. You know, let me just shove something here in goodwill or maybe retained earnings. Sounds like a nice place and then you know, and then it'll it'll just come back to bite you later. So I like that you mentioned that. Call it out in its own line.
[00:17:52] Host: Paul Barnhurst: Yeah. All right. So you're going to start get those historicals get try to get that cash flow line. Make sure the balance sheet the retained earnings. What next. Where would you go from there. Would you start with building some checks or how would you think about it. It's kind of that next step.
[00:18:08] Guest: Christopher Reilly: So I would build I'm glad you brought up checks I would build does my balance sheet balance. And so for each and every and in my head I'm just thinking of a spreadsheet right now. Sure. So for anybody who's listening they can do their best to do the same. I've got all these columns with my dates. So for each and every month I'm going to make sure it does the balance sheet balance. And I'm going to build that formula that runs throughout a row. And I'm going to link that formula back to a separate tab called error checking. That should basically always equal zero. The sum of that row should be zero because assets minus liabilities equity should be zero. So that's a check. The next is going to be does the cash on my statement of cash flows match the cash on the balance sheet. That's another double check. So those are the initial ones. And I will again link all those to this consolidated error checking tab. And I'll continue to build out that tab over time. So that's kind of in the structure thing. The next thing I'll do is before I move into a forecast, I'm actually going to build out the EBITDA schedule. And I know that everybody like hates on EBITDA or at least some people do or it's controversial. Nonetheless, it's very present in the work that I do, which is middle market.
[00:19:13] Host: Paul Barnhurst: Private equity as part of the job, regardless of what you think about it. Right.
[00:19:18] Guest: Christopher Reilly: It's part of the gig. So middle market FP&A middle market PE, we build EBITDA. Ebitda is non GAAP which is important to remember. So it's its own little schedule. But I still will build it below the income statement and above the balance sheet because it references information directly from the income statement. So it's a pretty logical place to put it. Sure. So I'll make sure I get the EBITDA built there, and I'll build the trailing 12 month EBITDA, because that number is going to be needed for a handful of things. Most obviously it would be valuation or covenant analysis. So I want I just want that in there so that now I've got history mapped out, income statement, balance sheet, some double checks and my EBITDA, then I'm going to flip to forecast in terms of like the next step, how do I start building this model into the future. And so what I'm going to do from an Excel or modeling standpoint is I'm just going to drag everything forward just one column. So let's just pretend I'm going January of the new year. It's a forecast. I'm going to keep everything exactly the same. So the income statement is going to be equal to December. Balance sheet is going to be equal to December. And my cash flow statement should be functioning because I've pulled it forward one month. Yeah I mean I need to make two changes at this point. And this is really important because this gets your balance sheet to balance.
[00:20:34] Guest: Christopher Reilly: And this will get all of rid of all the frustration in financial modeling if you can just do these two things. So the first is and imagine in your head. I've got all hard coded values in my balance sheet. Cash is hard coded. Retained earnings is hard coded because I've dragged it over one month and the history was hard coded. The first thing I'm going to do is I'm going to update my retained earnings to go from a hard coded value to a formula, and that's just going to be equal to the prior periods, retained earnings plus the net income in my new forecast month or January. That's step one. Then step two is I'm going to go to the cash on the balance sheet, and I'm going to link that to the ending cash on my statement of cash flows. Those are the only two things you have to do. And the balance sheet is going to balance. And that double check that I have at the bottom should now read a zero. Everything else in the balance sheet can be a hard coded number. All my working capital, all my fixed assets, all my debt can be static, but if I have the cash linked and the retained earnings linked up, then I'm good to go. Any other change is now just going to flow through the model and the net impact is going to be on cash.
[00:21:41] Host: Paul Barnhurst: So I totally get that. What you're saying is look, once you've built your your balance sheet, I mean, you've done all your historicals, that first thing you need to do is get that balance sheet set up. And obviously retained earnings is that first area and that net income. And then you know, any corkscrew you have and cash is one of those should always be equal to that ending balance. So starting by getting those two allows you to look at it okay. Things are flowing through when I've switched from actual to forecast. And then I'm guessing now you can start building your schedules and linking them into your forecast.
[00:22:17] Guest: Christopher Reilly: Exactly. So like if I know that what I call it, the plumbing, if I know the plumbing is right, then I'm going to drag my columns out for however long I need. Might be a year, it might be five years.
[00:22:28] Host: Paul Barnhurst: And I have one question if I can ask it when you say the plumbing, right. So when you're putting the actuals, when you start is the do you go through a design phase like with different models and things? Do you first do any kind of like maybe you map it out on paper or think, these are the sheets I need. Do you start with a template? How do you start? Like when you first open Excel and get started, you've got the actuals. You know, you have all the data. Maybe you've checked its balance. What's that kind of first part of that process? Do you do go through a design stage. Is there a framework you follow, a template you use? Does that make sense? What I'm asking.
[00:23:02] Guest: Christopher Reilly: Yeah, I don't do a ton of that anymore, but probably just because I sort of have it in my head at this point. But I basically would go, you know, actuals first, then sort of the design or modeling engine, then the output and then the error checking. And those are my, my big buckets. And I think you brought up something that's that I want to touch on. In terms of the actuals, I mentioned getting the actuals as a first step. Sometimes I will leave those on their own tab and label it QuickBooks or whatever the software is, and I will go account by account, and I will map those things into buckets that are then going to flow through to the three statement model using probably a Sumifs formula or something like that, which allows me to update the model more efficiently in the future with some kind of actuals forecast toggle. So we could talk about that more if we if we want to. But that's sometimes a first step. If I want a quick way to update the model going forward where everything is bucketed. So my three statement is an automated piece. Yeah.
[00:24:03] Host: Paul Barnhurst: And I guess also the bucketing there's another benefit there, at least I've seen sometimes in QuickBooks. They have a ton of accounts, and it doesn't make sense in a forecast to model every single one of those. I'm sure you've had many cases. You're like, all right, they got 15 T and E accounts. I'm not modeling 15 separate T and E accounts. Let's just put that down to one. So I'm guessing there's some also, uh, mapping that you're doing so that you can streamline the accounts you're using for forecasting and what you show the business. Because what comes out of QuickBooks and, you know, correct me if I'm wrong and what you show at the end are often different. They're they're consolidated less lines.
[00:24:39] Guest: Christopher Reilly: Yeah, it's exactly right. And the TNA example you said is perfect, right? There might be ten TNA accounts. I'm going to tag all of them as TNA or, you know, travel and entertainment, and then that's going to flow up to one consolidated bucket on the three statement model. If it's not an overly material line, I'm going to use a pretty basic assumption to forecast it. If it's going to be more material, then we can talk about a separate driver schedule for that. But I don't need I don't need 15 schedules for those 15 accounts. I just need one.
[00:25:06] Host: Paul Barnhurst: FP&A guy here. And as you know, I am very passionate about financial modeling and the Financial Modeling Institute's mission. I have been a huge fan of the FMI for years, and I was super excited when they decided to sponsor the Financial Modelers Corner. I recently completed the Advanced Financial Modeler certification and loved the entire experience. It was top notch from start to finish. I look better modeler today for having completed the certification. I strongly believe every modeler needs to demonstrate they are a qualified financial modeler. In. One of the best ways to do that is through the FMI's program. Earning the accreditation will demonstrate to your current and future employers that you are serious about financial modeling. What are you waiting for? Visit Wfmh institute.com backslash podcast and use Code podcast to save 15% when you enroll in an accreditation. Today, I had a customer that wanted every single account line from their NetSuite and insisted o paying model still gives me nightmares. It was a good learning experience for sure.
[00:26:22] Guest: Christopher Reilly: Yeah, I mean, I've.
[00:26:23] Host: Paul Barnhurst: Been there a lot of things and I'm sure you've been there.
[00:26:26] Guest: Christopher Reilly: It happens and it's it comes from the right place with the right intent. But it just gets it gets too complicated.
[00:26:32] Host: Paul Barnhurst: Yeah. And that's my biggest concern, like I told him, is I'm like, I fear the model is going to fail under its own weight, that you won't be able to maintain it because it's too complex, and it's because they want to understand every little thing. It's not like they just want to make it painful because they like pain, right? Nobody does that. At least. Hopefully nobody does that.
[00:26:51] Guest: Christopher Reilly: Right? Right. No. For sure.
[00:26:54] Host: Paul Barnhurst: All right. So sorry, I know I had interrupted you. I just wanted to cover a little bit of that, so I'll let you go back. You're talking a little bit about the plumbing and kind of pulling it over and yeah.
[00:27:04] Guest: Christopher Reilly: So I'm going to drag the model out as far as I want in terms of timing. It's anywhere from 1 to 5 years, sort of like a standard build. And then the quick thing I'm going to do is at the end of those five years, which are these are all monthly columns. So I've got two years of history, five years of forecast, I got seven years. So a lot of columns, I want to aggregate that information over to the far right side of the model in an annual summary. And I always am going to add my formulas to one extra column, a placeholder column, so that if I ever have to insert more months, my annual stuff is going to update automatically. I just want to get what does it look like for the year in terms of the totals, in terms of dollars? I also want to know what was the year over year growth, and then I want to know what is the percent of revenue. And I have all these stacked again in vertical columns to the right side of my model, so that as I make minute changes at the monthly level, I can then go to the annual level and just say, you know, does that does that look right? Yep. And so that's this, that's the structure or the plumbing. And then my next step is I get to what you mentioned all the support schedules. Because now that my balance sheet balances, I know that any change I make now I'm just adding detail. I'm not I'm not worried about model integrity because it's right. I just now I'm just making it more accurate. I'm making it more detailed. And so that's the support schedules. And so that's the that's the next piece. And then depending on the model that we're building I'm either going to have a separate tab that's going to link back to the line item that I need to model. Or if it's simpler I might just build it on the three statement model itself. And so I kind of do a a balancing act of what I prefer there based on the complexity required.
[00:28:46] Host: Paul Barnhurst: Sure. That vertical versus horizontal, how many sheets I have versus all in one. And I also always used to be a big fan of horizontal. And after having built a few three statement like, I actually like the vertical, if I'm doing a basic three statement, I think it makes a lot of sense getting it all in one sheet, like what I was doing, the old, uh FP&A where I had 30 departments that I'm forecasting. I want that all horizontal. And so I've kind of come to where it depends on what I'm doing, how I6I used to always be like, well, horizontal makes sense. I don't really get this vertical. Start building some three statements I get the vertical.
[00:29:19] Guest: Christopher Reilly: Yeah I think once you start doing it it's hard to go to the horizontal mode. And I think you can always print in sort of a horizontal fashion. But I think modeling structurally vertically can help you get 90% of the model done. But then I will build horizontal schedules for stuff that requires a lot of detail. So usually that's revenue, uh, headcount, capital spend and anything else that's just sort of a material line item in the business usually gets its own schedule.
[00:29:49] Host: Paul Barnhurst: Yeah. And as I heard someone said, I'll get your thoughts in Chenaru FMIs are a sponsor for this podcast. His comment was what he finds because you can do whichever one I prefer vertical, but what I found is you tend to make less mistakes because it's easier to do the linking with vertical. Your thoughts on that? Would you agree? That's probably the case?
[00:30:07] Guest: Christopher Reilly: I would, and you could actually do the entire model vertically if you wanted to. I mean, it's possible because you have the dates aligned. One of the benefits of that horizontal piece is you kind of know that it lives in its own ecosystem, which is helpful. Also, when it comes to headcount, you can always send the model around, but remove the headcount tab and keep some of that confidentiality out. So that's a big reason why I typically will do that. But I completely agree with what Ian said that like the vertical element is much easier to link, much easier to audit. And that's also the reason that I prefer it to.
[00:30:42] Host: Paul Barnhurst: Yeah. And that's what I've come to realize, especially with three statement way those schedules sit. It's interesting, you know, as you model the way you come to see different things. And yeah, anything you can do to reduce errors is a good thing because you're going to make them right. It's just a question. Are they going to be material? Right. Is usually what I say right? I mean the reality is what they say. Almost every spreadsheet depending on how you define errors, has one. Right. It's a question of is it material? Because at the end of the day, you also have assumptions that aren't going to be right. So just make sure you're not making material errors is what I like to say. And the more you can do best practice, the less likely you are to have a material error.
[00:31:21] Guest: Christopher Reilly: Yeah, exactly. And I think speaking of error is a nice thing, that I like to build another schedule. You know, we've talked a little bit about how I built the the indirect cash flow statement. We haven't talked mechanically about it, but it exists in this model that we've talked about in our minds. Below that I like to build a direct method, cash flow, which you can do in a three statement model, assuming your schedules are structured in a certain way, and what's called the corkscrew layout or the base layout. And if you build it using the direct method, it serves as a really credible double check to the integrity of your model, because if something looks off, it will jump out immediately. And if you can get the direct method and the indirect piece to tie, that's kind of my. Can I go to sleep at night and breathe? Okay. Knowing that this thing is built correctly. So I've been layering that into a lot. Pretty much every model that I've built going forward in the last couple of years.
[00:32:14] Host: Paul Barnhurst: Interesting. I've never done that, but I can see where definitely there's a level of comfort if they both match, because it's difficult to often to get the two of them to to tie because one's a one's a lot more work than the other.
[00:32:27] Guest: Christopher Reilly: Right? Right. And you can do it based on how you structure your support schedules. And that's kind of that's the trick to it.
[00:32:34] Host: Paul Barnhurst: Got it. Interesting. That's cool. So talking about tricks, I think you used that word there. What are maybe some of your five top five, you know, 3 to 5 tips or tricks when building that three statement model you've talked a lot about? Hey, you need error checks. Here's how I start it. Kind of think about the process, then go into the schedules. But are there any tips or tricks you've really picked up that you would recommend people adopt that are going to help them with the model?
[00:32:59] Guest: Christopher Reilly: Yeah. So I want to say error checking again. Just maybe. No, please.
[00:33:05] Host: Paul Barnhurst: We can say that ten times. Maybe error checking. Maybe I'll say.
[00:33:08] Guest: Christopher Reilly: That one twice, you know. But then when it comes to modeling the support schedules and by support schedules, I mean, again, in this imaginary model we're talking about, this is now stuff sitting below the cash flow statement that is going to feed back into the balance sheet. Trick number one would be if our cash flow statement has been built correctly, then we can ignore it forever. I don't ever want to link anything to the cash flow statement. Ever. All of my links should only go to the income statement or the balance sheet, and that's one of the biggest mistakes I see. People will link their capital expense forecast to the cash flow statement, and then they sort of back into the fixed asset account, and it usually creates an error. Sometimes it creates circularity. It's just not the right way to do it. So leave the cash flow statement alone. I'd say that's tip number one. Tip number two is something that I alluded to a few minutes ago using this this structure called base modeling, which stands for beginning addition subtraction and then ending. And I'll talk about it in terms of accounts receivable. So you could build an accounts receivable using a days sales assumption, which is what I typically teach in a lot of courses because that's the standard way to do it. There's another way where you start with the beginning balance plus the revenue minus the the collections of cash, and then equals the ending balance. And that to me is a slightly easier way to audit the file. And so you can link your revenue to that addition piece. You can model a separate formula for collections. And then that collections piece can be easily traced to the cash flow statement. It can also be linked to that direct method cash flow that I talked about. So using that that base structure I have found very helpful. And I'll use it for pretty much any account where I can.
[00:34:55] Host: Paul Barnhurst: Yeah. And I think that structure you mentioned in the beginning addition subtraction ending. So we were talking about one of the benefits you mentioned or one of the benefits that comes with the revenue schedule of doing it the way you mentioned the corkscrew or the beginning additions subtractions ending is if you have a customer that's materially different, you can model them in or a couple different assumptions. Wouldn't you agree? That's one of the bigger benefits versus day sales outstanding, which if you have an outlier they're going to skew the average. You may not even realize it if you don't, you know, have some of that detail.
[00:35:30] Guest: Christopher Reilly: Yeah, exactly. So days sales outstanding is always going to be inherently based on an average. And so it won't pick up outliers. If you use this base schedule, you can have a bunch of different line items between your beginning and ending balance. And sometimes I'll have 20 lines in there, you know, to talk about different customers with their respective collection schedules. And so that ending balance is much more refined. And then you can still just link that ending balance back to your balance sheet. So that's why I prefer to do it that way. You can't get the history as well using that base method. And so that's sort of the tricky part. But it's really good for forecasting. And so when I can build it I prefer to.
[00:36:07] Host: Paul Barnhurst: Yeah I know what you mean. You have to treat it a little different with the actuals. You're just going to probably lump it all into one place and move forward I get it. The joys of forecast versus actuals. Sometimes that switch can get a little tricky, right? So what are some of those other you mentioned a few tips. Any other kind of top tips or tricks that you'd recommend? What. Maybe 1 or 2 more.
[00:36:30] Guest: Christopher Reilly: I would say to try to keep the model all in one place, and then create your summaries and your print friendly stuff somewhere else. I see a lot of people try to do two and one and it gets it just gets really messy. And so I'd prefer to have a separate one pager that has some kind of date toggle at the top, where when you switch the date, your report refreshes. And that's something you can PDF and you can send out, you know, let the model be the model, let it have however many columns it needs and however many rows it needs. And let let that be the engine that then drives the outputs that you can send around. I wouldn't recommend trying to do both in the same place.
[00:37:14] Host: Paul Barnhurst: Couldn't agree more. But your summary in one place you know, put your model where it needs to be either. If your assumptions are going in the sheets or your assumptions are separate, make sure they're clearly laid out. But get that structure right because the reality. I love this example. When you mentioned you said the engine, right, the engine of the model, you think of a car. I don't need to look at the engine to know if the car is working. Most people don't want to look at your engine. If you've built a well-designed model, they can look at the summary, they can look at your assumptions and get comfortable with the model without looking at how you made the sausage, so to speak.
[00:37:51] Guest: Christopher Reilly: Yeah, exactly. I think that's a great analogy. And what you said just made me think in terms of assumptions. I probably go against the grain a little bit on this, where I think a lot of people like this global assumptions or input page. I tend to leave a couple assumptions on an input page, but then many of them I will also just put at the detailed level in the model itself, because I like to see as I make the change, I like to see the number update simultaneously next to my input. But what I will do is I will then at least link that input back to a summary page. So you can you can read the assumptions but not necessarily change them all on that input page. Sure.
[00:38:32] Host: Paul Barnhurst: Yeah. And I know that's a little different than most people, but I think the the method, the message and the idea is the same. Make it really easy and clear. Don't mix your assumptions with your formulas. Don't hard code them. Don't put them on row 7000. You know write. Was that the was that the row? Okay, good I got it. You know those type of things, right. Otherwise your model will be the one. Hey everybody come look at this.
[00:38:55] Guest: Christopher Reilly: Right.
[00:38:56] Host: Paul Barnhurst: Exactly right. You don't want to be that that person if you can avoid it. So those are some great tips before we get into our, uh, rapid fire section. I just have a couple more questions here real quick. First one is, what are the maybe 5 or 10 formulas that you think somebody needs to know in Excel to build a basic three statement model? I don't think it's really probably more than ten formulas. What would you say are the top ones people need to be comfortable with?
[00:39:22] Guest: Christopher Reilly: So when it comes to the income statement, you don't really need to know anything complicated from a formula standpoint. You're just adding and subtracting to get to your net income. When it comes to the balance sheet, a little bit trickier. I would recommend the people understand the working capital statistic formulas. And by that I mean days sales outstanding, days payable outstanding and days on hand. So that's for R, AP and inventory. And if I could recite them off my head I would. But I don't quite remember them exactly. But basically it's it's the relationship of the accounts receivable balance and the revenue computed to a number of days. And they're easy to look up online. And I just usually copy paste them in from old models. You want to understand if you're going to build your working capital using those traditional stats, at least understand that those are the formulas that you're going to need. And then from there, building the fixed asset account can be a little bit dicey. If your fixed assets are presented on a net basis, then when you're building the cash flow statement, you what you need to take the previous period's balance minus the current period balance then also minus the depreciation.
[00:40:33] Guest: Christopher Reilly: So that's a little bit of a nuance to that piece and the cash flow statement. And then the rest of the cash flow statement. Just understanding that to build it using the indirect method, which is what you do in a three statement model for the asset side of the balance sheet, you're going to take the previous period minus the current period. And then for the liabilities and equity section you take the current period minus the previous period. So you kind of want to have those in your head as these are the these are the formulas that I'm going to need to structurally get the model together. And then in terms of advanced Excel formulas, you really don't need a ton honestly, to build it correctly. I will use some IFS and some index match mostly to aggregate data and bring it together. But but that's that's going to the summary level. In terms of the structure itself. You don't really need much more than what I just described.
[00:41:23] Host: Paul Barnhurst: Yeah. You really add, subtract, know the formulas for any ratios, different things you need. And then you're probably going to need a lookup formula, index, match lookup, whatever you choose to use a sumifs maybe a max of min sometimes with your revolver or different things where you want it to either pay if it's below zero, right, or versus using a nested if that's probably about it for your basic model. There's not really a whole lot beyond that.
[00:41:53] Guest: Christopher Reilly: Yeah. No. You actually brought up a great point about the revolver. There's some complexity there. You can choose to introduce circularity or not. Either one works fine, but you are going to use maximums and minimums to specify a cache minimum and some kind of sweep percentage. And so that's definitely getting like deep in the weeds. But that's a fairly complicated formula to make sure that the business always has sufficient cache. And you can let the revolver be the backstop for that. So that's a more that's a more complicated one. But I'm glad you brought that one up.
[00:42:23] Host: Paul Barnhurst: Yeah, it's probably the hardest one for me is getting that right. Just when I went from PNL to have to do a three statement is getting the debt schedule, getting the cash results revolver right. The rest of it wasn't bad for me. That was the hardest area. Yeah, just making sure that all kind of balanced and made sense. And so let me let me see if I have any others here. I think that's it on modeling. So I'm going to ask you kind of a general Excel question. And then we'll go through our rapid fire. What's your favorite Excel shortcut?
[00:42:53] Guest: Christopher Reilly: Favorite Excel shortcut is the combination of control open bracket followed by F5. Enter. Because Control open bracket will let you trace a link. And then F5 enter brings you right back to where you were. So it's a really quick way to jump around the models and do some auditing. So I have that. I do that pretty much an automatic all the time control.
[00:43:17] Host: Paul Barnhurst: And you said left bracket and then F5 enter. Yes. All right. Great. That's the first time we've had that. That combination is the answer. So there you go. You get to be unique.
[00:43:26] Guest: Christopher Reilly: Good good.
[00:43:27] Host: Paul Barnhurst: All right. So let's run through rapid fire. What I'm going to say is anyone who's a loyal listener, if you want to listen to the last one and let us know if he's consistent, feel free to do that, I won't. You know the rules here, but I'll run through them. You get no more than 10s to answer. I'm just looking for an answer one way or the other, and then you can elaborate on 1 or 2. Some are the same as last time, some are new because we've we've added to this list. So the first one which you're very familiar with, circular or no circular references and models. No VBA or no VBA. No horizontal or vertical. Vertical dynamic arrays. Yes or no.
[00:44:06] Guest: Christopher Reilly: Yes.
[00:44:08] Host: Paul Barnhurst: External workbook links. Yes or no?
[00:44:10] Guest: Christopher Reilly: No way.
[00:44:12] Host: Paul Barnhurst: That's the usual response. I'm like, I just take that one out. I've had a few people say yes, but not many named ranges or no named ranges.
[00:44:20] Guest: Christopher Reilly: Uh, no. Okay.
[00:44:22] Host: Paul Barnhurst: Uh, do you follow a formal standard for your modeling, like fast or smart or any of those?
[00:44:27] Guest: Christopher Reilly: No.
[00:44:28] Host: Paul Barnhurst: All right. Will excel ever die?
[00:44:31] Guest: Christopher Reilly: No.
[00:44:33] Host: Paul Barnhurst: Will I build the models for us in the future?
[00:44:37] Guest: Christopher Reilly: I'll elaborate on that one. We'll go with.
[00:44:38] Host: Paul Barnhurst: Yes, though. Okay. Yeah. A lot of people do. It's a it's a hard one to just say yes or no to. Should you use sheet cell protection in your models?
[00:44:46] Guest: Christopher Reilly: Yeah. Sure.
[00:44:47] Guest: Christopher Reilly: Yes.
[00:44:48] Host: Paul Barnhurst: Okay. Do you believe financial models are the number one corporate decision making tool?
[00:44:54] Guest: Christopher Reilly: That's a good question. I think so, yeah.
[00:44:56] Host: Paul Barnhurst: Okay.
[00:44:56] Host: Paul Barnhurst: I had one person say no politics. Like, how do I argue with that?
[00:45:01] Guest: Christopher Reilly: Yeah, that's.
[00:45:02] Guest: Christopher Reilly: Also a good answer.
[00:45:04] Host: Paul Barnhurst: Yeah, that's probably my favorite answer on that one. And then I know the answer to this one. But we'll go ahead and ask it. What's your favorite lookup function? Choose Vlookup Index Match or Xlookup.
[00:45:15] Guest: Christopher Reilly: Index Match.
[00:45:16] Host: Paul Barnhurst: And have you started using Index Match?
[00:45:19] Guest: Christopher Reilly: A little, but not enough to be educated on it.
[00:45:21] Host: Paul Barnhurst: Okay, yeah, I finally started using it most of the time because I realized, oh, I really like that that solves this problem or that problem.
[00:45:28] Guest: Christopher Reilly: What's the main benefit? I'm not super familiar.
[00:45:31] Host: Paul Barnhurst: The biggest thing is it allows you in your X match you You could look at next smaller item, next larger item, a wild card search. Or you also have the ability to search first to last or last to first. So in a model maybe not as helpful, but if you're doing a lot of lookup stuff like let's say you have a list of dates and you always want the max date, right? You could say, give me the larger item. So maybe there's you're matching off a product and you want the last date. Yeah. Duplicates could be really helpful there. Or if you know there's going to be multiple and you always want it to be the last value in the list and you sort it a certain way, you can say search first to last or last to first. And so those are some of the real benefits, which I don't know. Typically, right. In a model you're looking for an exact match. It's not very often you're doing smaller or larger item in a three statement model. If you are, I would wonder a little bit about the model in most 90% of the time. And so it's really helpful in those type of situations. That's probably why you have it. Gotcha.
[00:46:30] Guest: Christopher Reilly: No, I can see it being really beneficial for actually for cash flow forecasting and for.
[00:46:36] Host: Paul Barnhurst: That's what I was going to say. Cash flow is probably where I could see it with different dates.
[00:46:38] Guest: Christopher Reilly: Yeah.
[00:46:38] Guest: Christopher Reilly: And flash reports, you know, anything that kind of has constantly refreshing data, that's cool. I'll have to mess with that a little bit more.
[00:46:44] Host: Paul Barnhurst: So I've just started as a default now, trying to always use X match because it will do everything. Match will do. Yeah.
[00:46:49] Guest: Christopher Reilly: Gotcha.
[00:46:50] Host: Paul Barnhurst: Now, if you run into somebody that doesn't have 365, that's a whole nother problem. But we won't go there. All right. So you wanted to elaborate? I think there was. I build the models for us.
[00:47:00] Guest: Christopher Reilly: Yeah.
[00:47:01] Guest: Christopher Reilly: So I think AI is going to definitely come a long way in terms of being able to
[00:47:06] Guest: Christopher Reilly: Build some models and take care of some of the structure of certain models and and streamline some three statement modeling and some cash flow forecasting. Uh, eventually I would say as of today's recording, it certainly does not do that. I have found with the people that I've talked with who are kind of still doing a lot of very detailed and kind of front line management consulting. They're not really using it just yet. What they're trying to use it for is not to replace model building. They want it to help with building more accurate assumptions and forecasts. And so I view it as a nice complement in the future where it can probably speed up a handful of things. You get the structure built a little bit faster, but the real benefit is to create accurate forecasts that eliminate some human bias. And so you can bring that information into into the model. So I kind of see it as a a nice complement in the future. Will it totally replace some jobs. Maybe some. But I think a a finance professional that knows how to build the models now will be in a good position to debug them in the future when AI makes a mistake, which it will, and then it can also use that AI information as a complement to put some more robust assumptions into that model. So that's kind of how I see the future of all that coming together.
[00:48:31] Host: Paul Barnhurst: And I could see that I think, you know, first, on the historicals being I'll just build all our historicals in a certain format. I mean, if it's QuickBooks, different things, especially if you could tell it, hey, group like things together, you might have to tweak it a little bit, but it probably could do 95% of that for you, That base build. And then you go through and do your tweaks. And then again, assumptions run these statistical models against this historical data and give me some assumptions on revenue growth and different things. Yeah, you may decide to build it a little different. Think of pricing the macro and help narrow down your assumptions, or at least validate them so that you're more confident in the assumptions you've used.
[00:49:10] Guest: Christopher Reilly: Yeah, I think that's well said. And I think there's always going to be a balance of the the human touch and element. And you know, the other day, you know, clients or whomever, I mean, they want to get trust from, from humans that there's some oversight in there. So I think it's going to become a really great tool. And I think you do need to know how to use it and practice with it. I don't foresee it replacing an industry or frankly, I hope that doesn't happen. I suppose it could, but I view them as kind of coming together to make everybody a little bit more efficient.
[00:49:40] Host: Paul Barnhurst: Well, at some point it may replace us all, and that's fine. And we'll just, uh, not have to worry about it. I guess I'll.
[00:49:46] Guest: Christopher Reilly: Do something else if that happens.
[00:49:47] Host: Paul Barnhurst: Yeah, let's see what happens. But it'll be interesting to watch. All right, well, let's go ahead and wrap up and I, you know, final thing is, why don't you tell our audience about the courses you offer? I know you have a lot of stuff on financial modeling education. Who are they for and how could they learn more?
[00:50:03] Guest: Christopher Reilly: So the courses are I mean, they're for anybody who works in finance. I would say there's a definitely a bit of a middle market focus because that's my background. So it's there's a focus on P and FP and A with that kind of middle market technical element to it. But it really is for anybody. It's all about just refining your skills on three statement modeling and cash flow forecasting. And I built them because when I was in private equity, I frankly just got crushed doing models that I didn't build very well. And I was getting too overwhelmed with having to do deal sourcing and deal modeling while also managing the FP&A function for portfolio companies. And I felt like the training that I had just wasn't good enough. It was a little bit too generalized. It was all about trying to model Apple or something and pulling information from ten CS, and that wasn't the universe that I was living in. I was living in QuickBooks and incomplete data and quality of earnings and monthly models and all kinds of nuance and adjustment and and so I wanted to build what would have been really helpful to me. And so that's kind of the whole the whole point. Somebody who's looking to refine three statement modeling and cash flow forecasting in that middle market sweet spot.
[00:51:11] Host: Paul Barnhurst: Perfect. And we'll go ahead and, uh, put a link in the show notes. I know it's, uh, financial modeling education. You search that, you'll find your, uh, site there. And I know you do a lot of great material. I've seen some of your courses, I've seen a lot of the reviews people give, and so I can definitely recommend it and encourage people to follow Chris. He does great work on on modeling and just want to say thank you for joining us today. Chris. Really enjoyed the chat.
[00:51:36] Guest: Christopher Reilly: Yeah. Thanks, Paul. It's so nice to be back. And thanks so much for having me I appreciate it.
[00:51:41] Host: Paul Barnhurst: All right.
[00:51:41] Host: Paul Barnhurst: We'll have to do it again one of these days. Sounds good. Financial Modelers Corner was brought to you by the Financial Modeling Institute. This year I completed the Advanced Financial Modeler certification and it made me a better financial modeler. What are you waiting for? Visit FMI at Wfmh institute.com backslash podcast and use Code podcast to save 15% when you enroll in one of the accreditations today.