CRaFT - Flexibility
Understand ‘Flexibility’ in the CRaFT methodology.
When to use
A key concept in financial modelling ‘Flexibility’ should be considered when building a model. The user should consider what inputs should be variable and how they should be able to vary. This may force the model builder to consider how assumptions should be entered.
As a general rule, hard code should not be included in a formula as it makes it harder to change the value, identify the nature of the value or assess what the underlying assumptions are in the value. There are exceptions though.
- Ability to change key assumptions within agreed parameters
- The most common method of data entry in practice is simply typing data into worksheet cells, but this may allow a model’s inputs to vary outside of scoped parameters. To ensure end users only have the ability to change inputs within agreed parameters the use of data validation is useful. To access Data Validation:
- Select the Data tab
- In the Data Tools section select Data Validation
- In the Allow dropdown box, List can be selected which will allow users to only select from the list of options that has been created
Lesson notes are only available for subscribers.