How do you check an Excel financial model for errors before you send it to your manager?

What the interviewer wants to hear

• Balance sheet balances and cash ties to the cash flow statement
• Check for hard-coded numbers inside formulas
• Trace formulas and check consistency across rows
• Sense-check outputs against history and intuition
• Use error checks and formatting conventions for inputs

Model answer

I start with structural checks: the balance sheet must balance in every period and closing cash on the cash flow must equal balance sheet cash. I build these as check rows that show zero, so any break is visible. Then I look for hard-coded numbers inside formulas, which are a common source of errors, and make sure inputs are in one place, coloured blue, with formulas in black. I check that formulas are consistent across each row, using trace precedents or Ctrl and backtick to view formulas. Next I sense-check the outputs: does revenue growth, margin or working capital look reasonable compared with history and peers, and do results move in the right direction when I change a key input. Finally I scan for #REF or #N/A errors and get a colleague to review anything important.

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