Overlays
Overlays in financial modeling represent a breakthrough in modeling sophistication and power. This patented technology allows multiple versions of a layer for any given parameter (e.g. Item 1 Revenue, Salesperson Headcount).
One way to think about overlays is as transparencies on an overhead projector. The bottom most level is replaced by any overlay (transparency) that covers it, but only if the transparency is included in the stack.
Creating Overlays
Case Dimensions
Overlays are directly associated with Case Dimensions. Each Case can have an overlay associated with it, if the dimension is configured to include either "An overlay per case".
Priority Adjusted Overlays
Referring to the section on conflicting overlays below, additional priority adjusted overlays can be created as needed as part of a data or formula layer.
Deleting Overlays
Deleting a case in a case dimension automatically deletes the overlay created by the case, and all layers contained in that case overlay, including any priority adjusted overlays.
Overlay Priorities
Overlay priorities determine the calculation order. A formula layer or value layers can be placed in any available overlay. If there are multiple layers for the same line item, the overlay with the highest priority is calculated last, and overrides (replaces) any layer that:
- Is of a lower priority
AND
- Overlaps in the same timeframe.
The lowest priority of all is a constant entered for a parameter. Let's say you have a line item parameter called Headcount. If you enter a constant of 1, then its value is one over all time periods, assuming you have not overridden (replaced) it with a value layer or formula layer in an overlay. Conceptually you can think of the priority of a constant as being negative infinity.
By default, the next highest priority is the Universal Overlay. Its priority is 0. The Universal Overlay is included in every model and cannot be deleted. Theoretically, constants and the Universal Overlay are all you need to build a complete model, but if you want a well organized model, you will use other overlays.
From here, every new Case Dimension is assigned a base priority. The first case dimension is given a base priority of 10. The second is given a base priority of 20, and so on. These increments are arbitrary and can be changed if necessary. In each case dimension, only one case is active (in use) at any particular time, so they have the same priority with no chance of conflicting with one another.
Conflicting Overlays
If more than one layer is created for the same line item and is assigned to the same overlay (or one with the same priority), a potential conflict could occur. The software handles the potential conflict by using the time of creation for layer, with the layer created last taking priority.