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Model Plug (Circular Reference) Won't Work

  1. #1
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    Model Plug (Circular Reference) Won't Work

    Hi,

    I am building a cash flow model and am having trouble with my plug.

    This is a balance sheet. Assets = Liabilities + Equity.

    In Years 2-7 of the model, Cash is the plug. So I said =assets-(L+E). Since assets is the sum of all assets, it includes cash, and thus there is a circular reference.

    In Year 1, I have a different plug. Goodwill is my plug in Year 1. Similar formula, circular reference.

    I have iterations turned on.

    However, the model won't balance appropriately. Whenever I hit save the numbers just keep getting wilder and the model doesn't balance at all.

    Does anyone know why this might be happening, I apprecaite the help.

  2. #2
    Administrator 6StringJazzer's Avatar
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    Re: Model Plug (Circular Reference) Won't Work

    Is this something you can post? I appreciate that it might be proprietary but maybe you could put in fake numbers.

    The term "plug" in this context is new to me, what do you mean by that?

    I don't get how you are calculating cash as assets-(L+E), since (circular reference aside) it would be zero.
    Jeff
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