A Practitioner’s Guide to the Quarter That Beat Its Budget, Missed Its Plan, and Earned Less Money
Julian R. Sterling
These are the companion files of Financial Planning and Analysis by Julian R. Sterling.The book on Amazon →
The four Excel workbooks that go with the book, completed so that every figure it prints is now
reproduced by a live formula and checked: 203 controls, every one green, recalculated in LibreOffice.
Around them: the same four models with the inputs emptied, thirteen working documents to print, forty questions
that mark themselves, and three cases the book names and never takes to a number. If a control ever reads CHECK
rather than PASS, either the workbook is wrong or you have changed an input — and you now know which of the
book’s conclusions depended on it.
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Twelve workbooks, the printable documents and the read-me. Each group below can also be
downloaded on its own. Last revised 24 September 2026.
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These carry the book’s own figures. The first versions left out Chapters 1, 3, 6, 9, 12, 15 and 16;
they are now in, each on its own sheet, and every figure has a check.
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Chapters 2, 7, 8 and 12
The five comparisons
The same quarter’s revenue of 216,340,000 held against all five numbers
the company already owns: the budget of 210,000,000, the prior year’s 218,900,000, the
July forecast of 221,000,000, the preceding quarter’s 208,600,000 and the underwriting
plan’s 232,500,000. Two read favourable and three adverse, and the spread between the
best and the worst reading is 10.6610 per cent of revenue. Every one is
correct.
A second sheet carries the quarterly phasing of all three documents, so the
90,000,000 between the approved budget and the plan the owners underwrote
can be seen where it actually accumulates rather than only in the quarter that has to explain
it. The budget is 0.0000 per cent above the prior year; the plan is 10.7143 per cent above it.
Nine months in, the company is 6,340,000 ahead of one document and 64,160,000 behind the
other, and the reforecast year lands 77,660,000 below the plan.
New sheet: the cost of the budget cycle of Chapter 12. 118 people, six and a half days, 620 a
day: 475,540, 0.5105 per cent of budget EBIT. The fourteen weeks are 26.9231 per cent of the
calendar, which is the larger cost.
The instrument decomposition on revenue and on gross profit, with the standard unit cost held
at 62,560.00 throughout so that nothing here is a cost story. Volume adds
16,560,000 of revenue and price removes 5,520,000; on gross profit volume adds
5,299,200 and price removes 5,520,000, so the segment sold 180 more units and earned
220,800 less. Both conventions for the cross term are on the page, along with
the 720,000 that moves between them — which is why the base has to be stated every time.
Then the group bridge, and the part worth playing with: the margin movement split into
-1.5733 points of mix and -1.4278 of price. Set the discount
to zero and the gross profit variance turns favourable by 1,919,200 while the margin stays
1.5733 points below budget. The mix effect survives any pricing assumption you care to impose,
and it is the larger of the two.
Three new sheets. Opex: the green 1,400,000 of research and development is fourteen empty
roles, and a one-quarter slip of the platform defers 5,952,000 of gross profit, 4.2514x the saving; the
underspend pays only if the slip is under about three weeks. Leverage: 4.1132x, the three
breakevens, and one point of margin worth 9.0175 per cent of EBIT. The reforecast breakeven is
655,684,841.90, on the unrounded margin (the book divides by the rounded one and prints
655,684,330.95). Commission: a representative gives up 48 to grant a 4,000 discount, 83.3333x;
on gross profit at the neutral 3.75 per cent the quarter pays 140,760 less.
Contribution built from the segment expense lines, then the same 76,000,000 corporate pool
allocated on revenue and on gross profit, side by side. Instruments reports
-37,642,285.71 on one base and -25,717,899.36 on the other:
11,924,386.35 of reported profit created by the choice of denominator, with no
cash moving and no decision taken.
Then the closure test, with the avoidable share of the pool as a switchable input: the
five-year decay of the installed base at 8.00 per cent, and a year-one cost of
9,659,200 to close the group’s largest reported loss-maker. And the
discount judged over the life of what it placed — 6,951.67 a year per instrument on the
conservative reading, 10,076.67 on the marginal one, a year-one net of -4,268,700 and a payback
of 4.4114 years against a 12.5000-year implied life. The discount rate is a
cell: the placements are worth 1.5782 times the discount at 10.00 per cent and stop repaying
only above 20.4548 per cent.
New: the driver tree of Chapter 9, where ten per cent of the installed base is 24,184,000 of gross
profit, a quarter of the budget EBIT. And, beside the book’s test as printed, the same test with the
180 extra units credited with their own sale, as Chapter 4’s bridge credits it: year one is
-4,182,000 on the conservative reading (the verdict holds) and +1,593,000 on the
marginal one (it does not). Case one works it through.
Eight observations of the error of the forecast made at the start of each quarter. Mean
1.8568 per cent, sample standard deviation 2.0273, and a ratio of bias to
noise of 0.9159x — a forecast that is merely noisy is a forecast; one
whose mean error is not zero is something else. Mean absolute error falls from 2.4068 per cent
to 1.4926 from one subtraction and no new information, an improvement of
37.9843 per cent.
The correction applied to the submitted fourth quarter, and beside it the honest width of that
correction: one standard error either side spans 233,339,938.69 to 230,078,896.14, a band of
3,261,042.55 against a correction of 4,302,056.44 (the book computes the band from rates rounded
to four decimals and prints 233,339,924.86 to 230,078,694.71). There is room for twelve observations
and every statistic counts what is filled, so the thinness of the sample can be tested rather than
asserted. A new sheet carries the reforecast of Chapter 10: EBIT 86,977,755.48 at the third
quarter’s margin, 94,060,466.67 at the budget’s.
The four workbooks with every input emptied. Each sheet waits for the inputs it uses, then computes; the checks sheets count what is missing and test what holds for any inputs.
Chapters 1 to 16
Your quarter, your bridge, your segments, your forecast
The five comparisons and the phasing, the price-volume-mix bridge with the underspend test, leverage and the commission plan, contribution and allocation with the closure test and the driver tree, and the forecast error log with its reforecast: the same formulas, every blue cell emptied. Rename the segments and they carry your names.
The book’s inputs are listed in a text file inside the archive. Type them back in and the book’s figures come back with them: 10.6610 per cent of spread, 1.5733 points of mix, 11,924,386.35 of profit from a denominator, 1.8568 per cent of bias.
Thirteen pages to print and use. A4, with margins wide enough for US Letter.
Chapters 2 to 18
Thirteen working documents
The comparator sheet, every headline line against every comparator with its owner and its blind side. The four questions and the ten per cent test, page by page. The price-volume decomposition with the convention stated. The gross profit bridge with an owner per step and the margin split. The favourable variance review. The negotiated budget and the plan-to-budget bridge.
The driver tree with its pruning rules. The rolling forecast charter. The forecast error log with its statistics. What the budget cycle costs and what it changed. The segment page read backwards, with the closure test. The operating leverage card and the commission plan on one unit. And the one page of Chapter 18: fourteen lines, each with a comparator and a threshold.
A workbook that marks itself. Answer in the yellow cells; the marking fills in as you go.
All parts of the book
Forty questions on the book
Seven on the quarter and its comparators, eight on variance done properly, eight on planning, eight on decisions, three on the pack and the page, and six on the three cases below. Numbers are marked to a tolerance, multiple choice to the letter, and the score sheet counts your errors part by part: that is your revision list. Every answer and its reason is on the last sheet.
New material, not a restatement. Three situations the chapters name and never take to a number, built on the book’s own figures: nothing is added. Each case is one workbook: the note is the first sheet, the model is the rest, and a checks sheet closes it.
Chapters 4, 9 and 14 · Case one
The discount, counted whole
Chapter 14 judges the discount on what the 180 extra units earn downstream and credits them nothing for their own sale, which Chapter 4’s bridge counts. Counted whole, year one is -4,182,000 on the conservative reading and +1,593,000 on the marginal one. Retired at the base’s own 8 per cent a year, the units repay in 5.12 years, and the discount stops paying above 15.03 per cent, not 20.4548. At 10 per cent, at least 142 of the 180 must have been won by the discount.
Chapters 10, 11 and 17 · Case two
The fourth quarter, with its error attached
The reforecast of Chapter 10 and the bias of Chapter 11 in one table. De-biased, the year’s EBIT is 85,144,555.25. To meet the budget EBIT the fourth quarter needs a margin of 45.23 per cent on the revenue submitted and 46.07 on the de-biased revenue, back to the first half’s 46.06 after a third quarter at 42.61; at the third quarter’s margin it needs 250,489,387.46 of revenue, more than the plan’s own fourth quarter.
Chapters 3, 14 and 16 · Case three
Should we discount again?
The corridor question of Chapter 3, answered as a rule rather than a verdict. A 4,000 discount must win 11.40 extra units per hundred to pay over the life, conservatively, at 10 per cent; 116.5 on a one-year view. The third quarter’s 15 per hundred clears it only while fewer than 21.8 per cent of the base buy their consumables elsewhere. Under the revenue plan a representative gains from the discount at 4.55 per hundred: between the two lies the zone the approval route exists for.
the printed figure beside the computed one, with a PASS or a CHECK; each book workbook ends ALL PASS
Blank set and cases
the checks count what is still missing and test what holds for any inputs; each file ends ALL OK
Why the checks matter more than the models
A workbook that agrees with a book proves nothing on its own — the author wrote both. What
the Checks sheets do is different: they force the model to reproduce a number that was printed
before the model existed, from a formula rather than from the number itself.
On this book the discipline caught one thing that would have inverted a conclusion. The
downstream earnings of a placed instrument had been computed by dividing the consumables and
service contribution by the year’s 4,800 placements rather than by the installed base of
24,000 — an overstatement of exactly 5.0000x. On the wrong figure the
discount cleared its bar inside year one and the chapter had a tidy reversal. On the right one it
destroys value in year one, exactly as the variance report said, and repays only over the life of
what it placed: 4.4114 years against an implied 12.5000. The tidy version was
wrong and the true one is more interesting, which is usually the way round it goes.
The second pass, when the missing chapters were added, caught two smaller things of the same family:
a breakeven divided by a rounded margin, and a one-standard-error band computed on rounded rates in the
very chapter that warns what a fourth decimal can do. Both are corrected in the files, and the
checks now demand agreement to the sixth decimal on every ratio.
Where a shortcut and the full computation disagree, both are shown. The de-biased fourth quarter
is 231,697,943.56 on the exact coefficient and 231,697,834.61 on the same coefficient rounded to
four decimals; the per-representative figures differ in the last cent depending on whether you
divide the variance or difference two rounded averages; and the full-year gross profit at the
budget margin is 78.67 apart on the rounded and unrounded rate. None of the three gaps is smoothed
away, because a reader who can see the gap is a reader who will not be surprised by it.
Go beyond the companion files
Financial Planning and Analysis develops the complete framework behind these models, with the assumptions, trade-offs and worked examples tied together.
The workbooks open in Microsoft Excel, LibreOffice Calc, Google Sheets and Numbers; the PDF
prints on A4 or US Letter. They use no macros and no add-ins, so nothing needs to be enabled or trusted. If your spreadsheet asks
to update links on opening, decline — there are none.
What changed, and when
24 Sep 2026
The four workbooks completed: Chapters 1, 3, 6, 9, 12, 15 and 16 added, 203 checks where there were 49. Corrected: the one-standard-error band of Chapter 11 is 233,339,938.69 to 230,078,896.14, not 233,339,924.86 to 230,078,694.71; the reforecast breakeven of Chapter 15 is 655,684,841.90, not 655,684,330.95. Added: a blank set, thirteen working documents, forty questions that mark themselves, and three cases.
How do you calculate forecast bias and MAPE?Bias is the mean signed error, MAPE the mean absolute one: 1.87% against 2.15% over eight quarters. Removing the bias alone cuts MAPE to 1.23%, a 42.8% gain.
How do you calculate a flexible budget variance?Restate the budget at actual volume. A quarter 186,000 below its static budget is 192,000 adverse on volume and 6,000 favourable on the flexible budget.
How do you build a driver-based revenue forecast?Write revenue as drivers times rates: 4,800 placements at 92,000 plus 24,000 installed units at 16,600 gives 840.0 million, and shows which driver moves EBIT.
Closing the DealTwo defensible bridges 20.70 million apart, a peg worth 7.00 million, and the six choices that remove 6.60 of a 12.00 earn-out.
CMBS and CRE CLOsWhere the loss actually lands, from appraisal reduction to realised severity, and what the B-piece is really being paid for.
How to Read a Commercial LeaseThe three refinements chapter 19 names and never performs, and the renewal rate below which the mark-to-market is worth nothing.
How to Read a Credit AgreementWhere the default actually comes from, the cure that costs 5.5 times the other, and the capacity nobody adds up.
How to Read a Real Estate Loan AgreementThe cure ratio in closed form, the four-point window in which the cheap cure works, and the cure sized to the wrong threshold.
Office Real EstateA six per cent yield that returns 3.2 per cent once the re-letting cycle is paid for, and the headline-to-net-effective rent arithmetic.
Private Equity Real EstateBoth worked waterfalls to the dollar, the two capital stacks, and the arithmetic of the promote made changeable.
Private Markets PerformanceThirty-one of the thirty-three figures chapter 19 publishes reproduce exactly — and the two that do not are named rather than quietly adopted.
Raising a Real Estate FundThe chapter 17 funnel run on a calendar — when the first close actually lands, and why more travel does not help.
Real Estate FinanceFour people look at one building and reach four numbers; the lender is whole only above 105,109,489, twelve per cent below today’s value rather than forty.
Real Estate Financial ModelingProperty, development and fund models built line by line, and the modelling test worked end to end.
Real Estate Fund ManagementThe waterfall of 6.11, the build-to-core of 8.7 and the proceeds gap, reproduced as live formulas rather than asserted.
REIT Analysis and ValuationFFO of 532.0, AFFO of 381.0, net asset value and dividend safety — every figure a formula you can change.
Retail Real EstateThe occupancy cost of every unit in a centre, the sixteen per cent of the rent roll no tenant can sustain, and the right-size-convert-or-hold decision priced.
Sale and LeasebackA €179.5 million transaction end to end, with rent cover measured on the entity that actually signs the lease.
Self-Storage Real EstateThe cohort engine behind a 590-unit store, and the rate increase on existing customers priced against the move-outs it causes.
The Fund Finance ProfessionalChapter 8 builds the reported-to-eligible NAV bridge; chapter 9 computes every ratio without it. Two points at every state — and what a subscription line does to the IRR.
The Growth Equity InvestorWhat a pro rata cheque really costs, and the band where defending your ownership loses money.
The Private Credit InvestorThe two coverage ratios are not measured on the same thing: the erosion is 47.7 per cent, not the 28.7 the headline implies.
The Private Equity Fund Controller PlaybookThe book defines IRR, DPI, RVPI and TVPI, tells you to update them at the exit, and prints not one value. Computed: a 1.833× deal inside a fund at 0.892 TVPI.
The Venture Capital AssociateWhat defending a position costs, and how many companies a reserve pool actually defends.
Treasury ManagementFive people quote the cash balance of one company on one morning, from 214,000,000 to 68,400,000, and all five are right.
Energy TradingA position report that is 91.7031 per cent hedged and correctly computed, on a book that is short 2,542,000 MWh — and a margin call of 198,400,000 the next morning.
Financial Risk ManagementA fund inside every limit that cannot meet a redemption — and the number that decides it is the one with no currency attached.
Business ValuationThree advisers land 26.8 per cent apart on one company, and the whole gap turns out to be 1.96 points of perpetual growth.
Quantitative FinanceThree models agree to a quarter of one per cent about a number that one unobservable input moves a hundred and three times as much.
Asset ManagementFour people quote four returns for one mandate, all correct and 2.7017 points apart — forty-eight times the manager’s net skill.
Alternative InvestmentsA manager reports 13.29 per cent and the endowment earns 6.26 — both correct, and only a third of the advertised advantage arrives.
Venture CapitalOne company out of twenty-eight returns 56.7 per cent of the fund, and half the capital goes in after the decision — at half the return.
Machine Learning for FinanceFive people quote the accuracy of one credit model, all five are right, and the number that decides how much money it makes is none of them.
Commercial Real Estate InvestingThe equity earned 8.6647 per cent and the investor received exactly 8.0000 — the preferred return, and nothing above it.
Mergers and AcquisitionsThe board paper says the deal creates 13,436,667 of value. The arithmetic says it destroys 17,530,855. Nobody is lying.
DerivativesThe treasury report says the hedge cost 1,233,698. That is the interest differential, not a cost.
Construction Cost ControlA contract sum of 26,301,102 became a final account of 29,153,363 on the building that was drawn — and 85.8 per cent of what was lost was knowable on the day it was signed.
Pricing StrategyA list price of 148.00, a pocket price of 112.51, and the nine deductions in between — with what one point of price is actually worth.
Trade FinanceSix routes to payment on one 4,200,000 export order cost between 178,040 and 223,268, a spread worth 14.8 per cent of the margin, and a day of buyer credit costs 1,031.76.
Cost AccountingOne factory costed twice on the same 13,440,000 of overhead, and 4,053,091 moves between four product families.
Contract ManagementA bid 5.50 a unit cheaper, signed on paper worth 9.81 a unit more — and 94.68 per cent of it was knowable on the day of signature.
Capital MarketsFour defensible readings of one bond, the cost of an issue under each convention, and the placement discount computed at a constant discount.
Financial RegulationThree ratios pass and the fourth is in breach by 1,956.0 million: the output floor, the liquidity buffer after encumbrance, and the loan split.
Bank ManagementFour defensible readings of one balance sheet, the deposit beta measured two ways, and the liquidity that lasts 3.9 days.
The Real Estate WorkoutFour ways out of one broken loan, discounted to today, and the 58.7 cents at which a payoff beats enforcement.
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