Iteration on Excel

why do you need iterations on? prob better to build models with no circular refs

Are you joking?

You can't build a proper model for a leveraged company without using circular references.

Base your interest calculations off of the opening debt balances from the prior period to avoid a circular reference and using iterations. You're interest expense will be slightly overstated (assuming high opening debt levels under a leveraged scenerio) but you're being more conservative then anything if building-out on an annual basis.

It wouldn't necessarily be "proper", but I guess for the debt that's not much of a shortcut.

However, I can't even imagine a model with the appropriate investor / management distributions waterfall that didn't have circular references (for time vesting options, performance based options, performance "catch-up" options, and any number of other crazy profit sharing arrangements that I have to build for any given deal).

Doesnt F8 or F9 force a refresh of the calcs?

Just loop that via VBA.

?

That's what it sounds like.

Maybe there are some IT-savvy folks on this board that do know, but honestly I don't know why some times the iteration option gets unchecked in Excel's options. Usually, it only happens to me if I'm opening an Excel file from someone else, since I have iterations on in my default settings.

Clearly most of you have never built ANY model, let alone a "proper" model. There is no way to build a fully functional simple 3 statement model without a "circ" due to interest income on cash since it depends on your interest from the rest of your debt and what if any revolver draw interest you have. If you don't know there is no shame is not responding, but you are poisoning your fellow newbies by talking

Actually, if you're just talking about the three statements without getting into more complicated waterfall-type calcs, then you can, as pmart suggested above, use beginning balance for all of the interest calcs (including interest expense on term/sub debt, interest expense on the drawn revolver, committment fees on the undrawn revlover, interest income on cash balances, etc.). The real problem is that the required shortcut (i.e., using begining instead of the average balance calcs) means that the model gets less and less accurate.

Can any one explain in a little detail why the Iteration function is required to calculate interest. Thanks

a buddy of mine from UBS LA told me the guys there hated circular references...just food for thought

Not trying to be an asshole, but that makes absolutely no sense.

It's hard to know what people are talking about when they don't reference anything...

Powermonkey... that will work but only on NEW build models.. (who builds models from scratch?) Excel will override the users preferences with the workbook's preferences... but that is a great way to customize how your XL book looks when you boot up a new one.

Pelbo... to explain on here would take too long... think of interest expense as tying together all of the fin. statements (affects your net income... which affects your balance sheet & cash flows which in turn affect your net income... ). This is a fundamental of modeling and you should be comfortable with it before getting into banking (hopefully not already in banking)

Buysideguy: UBS LA boys are wild... all ballers!

Original post: how many models are you booting up that you cannot hit alt+t+o+c+alt+i... or even gasp use your mouse?