Circular reference switch: when to turn on/ off?

Question

Hi all, when a 3 statement model is completed, we need to enable the circular reference function, and then set the "Circular Reference Switch" to 1 in the model.

When saving the completed model, should I keep the Switch to 1, or should I set to 0? If the Switch is set at 1, will the model result be different when someone opens the model in the future, as the circular reference might be re-calculating?

I've seen mixed answers on the internet, so I would like to learn from your perspective. Thank you!

Answer 1

Hey! When dealing with the circular reference switch in a 3-statement model, I’ve set it to 1 while working on the model to ensure accurate calculations. However, when saving the completed model, I always set it back to 0 to prevent any recalculation issues when others open it later. This method helped me maintain consistency and stability in my previous projects at MBB.

For more detailed guidance on managing circular references, I always checked out resources from financial modeling courses or platforms like Wall Street Prep - maybe that helps you too?

Alessa :)

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