The reality of financial modelling is that the model build is not linear. We do not always get all the data at once and we do not always have all the necessary information. It’s important to have a coherent plan for these situations. This modelling guide shows you how to present “placeholders” in a clear and efficient way. It also explains a technique of creating “placeholders” that will help you indicate clearly that something in your model is temporary code.

1. Financial Modelling
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PLACEHOLDERS

2. A place for everything,
everything in its place
Benjamin Franklin

3. ABOUT THE FINANCIAL
MODELLING HANDBOOK
Financial modelling should be collaborative. Collaboration reduces
error, speeds up development time and lowers cost. The Financial
Modelling Handbook is a collaborative, crowd-sourced guide to
building better financial models using the FAST Standard.
www.financialmodellinghandbook.com/contribute

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NEHA
Neha Kakar is a Financial
Modeller at F1F9.
She specializes and works in
Project Finance modelling and
also provides support to online
training clients.
Financial Modelling
HANDBOOK

5. Building financial models is rarely linear. Often we start with
incomplete information. Sometimes, in the act of trying to model
something, we find out that our conceptual understanding was not as
clear as we thought it was.
Placeholders give us the freedom to mark lines as temporary.
Sometimes because we don’t yet have sufficient data, sometimes
because we don’t yet have sufficient clarity.
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ACCOMPANYING EXCEL EXAMPLE
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PLACEHOLDERS

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INCOMPLETE DATA
This simple cost forecast requires us to convert an annual figure to
semi-annual, and then escalate it. However, we don’t yet have
escalation assumptions. Having the cost line modelled will help us to
put other parts of the model together.
Putting in a placeholder for the escalation factor helps us to make
progress, safe in the knowledge that we can come back later and
easily replace the placeholder.

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CREATE PLACEHOLDER – STEP 1
First we type the label
1
Then we apply “placeholder format” to the line. This is intentionally bright and
noticeable – it’s supposed to draw attention to itself. Nobody looking at this sheet
should miss this line item. By having a standard format for placeholders it’s
immediately clear to anybody reviewing the model that this is a temporary line item,
to be corrected / updated later.
Shift + spacebar to select the row, followed by Shift+Ctrl+Y (format macro shortcut)
2
1
2

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CREATE PLACEHOLDER – STEP 2
Lawyers use square brackets in contracts to indicate a clause that has not yet been
finalised or agreed. This is a useful technique for us to borrow.
This not only gives another visual indication that this is a temporary line item, it will
also make it easy to search for placeholders later. This is a key point. It’s essential
that we are able to reliably find all the temporary items in a model later so that they
can be fixed. By using square brackets we can be sure of finding these lines later.
This means we don’t have to try and remember where they are or keep a list. The
information is in the model.
Shift+Ctrl+T to add square brackets to a label (format macro shortcut)
3
3

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CREATE PLACEHOLDER – STEP 3
The last step is to write a note to a. people who
might be reviewing this model and b. your future self
to explain why this item is temporary, and what you
plan to do about it.
Shift+F2 to insert a cell comment.
Hit escape twice to exit comment editing mode
4
4

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CREATE PLACEHOLDER – STEP 4
Now we can add placeholder values.
In this case we have just added 1 all the way across
the timeline. Some modellers may be distressed by
this “hard-coding” of assumptions. It’s important to
note that this is temporary, and has been clearly
marked as such. It will be replaced later.
5
5

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USE PLACEHOLDER IN CALC
5
Now we write the calculation as normal. We now have the “fixed cost” calculation done.
This will be required in other parts of the model. Of course, all the dependent parts of the
model will be wrong, but it will let us progress with the model build.
Once we have properly modelled the escalation factor, we’ll replace this placeholder, and
the updated values will flow through the model.

12. SOMETIME LATER…

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FINDING PLACEHOLDERS
By using “square brackets” on the label, you can easily find all the placeholders in your
model at a later date by searching, using Ctrl+F to “find” square brackets.

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REPLACING THE PLACEHOLDER
Now that escalation has been calculated we can replace the temporary placeholder with a
link to the calculated escalation factor.
(Note: this is a simplified escalation calculation for the purpose of the example. Escalation is
a whole other topic in itself)

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REMOVE THE COMMENT
Remove the comment
using Shift + F10, m
As you are going to
replace the placeholder
with a link to the new
calculation, you do not
want to copy across the
comment.
6
6

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COPY ACROSS AND CLEAR FORMAT
7
Replace the label in column E with a link to the
calculated escalation factor.7

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COPY ACROSS AND REFORMAT
7
Once the link is copied across, the proper calculated values will flow into the cost calculation
and on through the rest of the model. The formula in row 13 does not have to be changed.
To reformat the line:
Shift + spacebar to select the row
Shift + Ctrl + C to clear out the shading (format macro shortcut)
Shift + Ctrl + M to mark the line as a import