Time & Money is intended to demonstrate the promise of using Coda for financial modeling. Time & Money uses a rules-based methodology for building financial models built on Coda's relational database system. This approach is in contrast to the formula-in-cell approach used in models built on spreadsheet platforms, such as Excel. Using this unique approach, Time & Money demonstrates how modeling in Coda can have major advantages over spreadsheet-based financial modeling. Some of the big potential advantages are listed below, some of which are apparent in the current prototype and others that can be incorporated into future, full versions of Time & Money (or other Coda-based financial modeling platforms):
Assured model integrity. In Time & Money, financial models are built by establishing rules that, in turn, generate a financial model. Although the platform allows great flexibility, the structure of a model can be taken care of by Time & Money so that it cannot be compromised by inadvertent errors, such as by failing to copy a formula into every necessary cell or by plugging a value into a cell to temporarily replace a formula, then forgetting to revert the cell to a formula.
Easy universal changes. Even after a model is built, universal changes can be easy. The project schedule can be changed, categories of expenses can be multiplied by some factor, the model can be set up to be viewed in quarters or years instead of months. All of these things could be done without needing to restructure the model or to re-write and re-copy formulas.
Fluid adaptation to schedule and date changes. In Time & Money, all financial model lines are tied to a schedule, so changes in the schedule automatically reflect in the financial model. The schedule can use conceptual periods or specific dates, and cash flow definitions can also refer to periods or specific calendar dates. Time & Money models could also be set up to switch fluidly among weekly, monthly, quarterly, and annual cash flows.
Self documentation. The rules-based approach makes Time & Money models self-documenting. Cash flow definitions and any special parameters (such as a revenue growth rate) can all be listed in one place, and exceptions to the basic cash flow definitions can be listed in a table. Thus, the assumptions page may be automatically generated (a dream for analysts).
Seamless development from "back of napkin" to complex model. In a more advanced version of Time & Money, a basic model with financial results could be created over lunch in five minutes, then model detail could be built out over time as information becomes available without re-doing the model. Users could switch between "rule of thumb" definitions and highly analytical customized definitions of a category of revenue or expense with a simple selection.
Easy scenario management.Time & Money could be further developed so that once the baseline assumptions are set, scenarios can be created by varying any parameters, with Time & Money automatically generating a list of differences among the scenarios.
Automated sensitivity analysis. A more advanced version of Time & Money could be given a list of variables to test for sensitivity, then generate a table showing how the variation in each variable affects specified outcomes, such as measures of return or of value. Even timing parameters could be easily included in the sensitivity analysis, such as to test the sensitivity of the model to variations in product development time.
Retain complete Excel-like flexibility in building models. As Time & Money is built out, it could do all of the above while maintaining vast, Excel-like flexibility in building custom financial models. In fact, Time & Money could not only provide flexibility in the base model, but also allow its tools, such as connecting tables to schedules, to be used in supporting tables and custom analyses, empowering the user to create sophisticated customizations with minimal effort.
