The Club Sandwich Problem: Why Acronyms Break Financial Models

I spent the best part of four years living out of a suitcase.

During my five-plus years in KPMG’s business modelling team, I worked on some of the largest deals in the world. Infrastructure projects, energy assets, banking transactions, PE acquisitions — the kind of engagements where you fly out on a Monday, check into whichever hotel is closest to the client, and don’t go home until Friday. Sometimes not until the following Friday.

When you live like that, you develop opinions about things that normal people don’t think about. Flight seat preferences. The optimal hotel room floor. And, inevitably, club sandwiches. The club sandwich is the universal constant of business travel — it’s on every hotel room service menu in every country. I’ve eaten hundreds of them. I became, by sheer volume, a reluctant connoisseur.

So when I recently stumbled across an article claiming that “Club” is actually an acronym — “Chicken and Lettuce Under Bacon” — my inner financial modeller couldn’t let it go. I had to check.

Always Verify Your Assumptions

The acronym story turns out to be exactly the kind of thing a good modeller should be suspicious of: a neat, plausible explanation that doesn’t survive scrutiny.

The “CLUB” acronym first surfaced in a 2018 episode of Peter Kay’s Car Share sitcom. It was a joke. The sandwich has existed since the late 1890s, when it appeared at a gentleman’s club in New York — the Saratoga Club House, by most accounts. The name comes from the club, not from an acronym.

Snopes confirmed it. The etymology is well documented. The acronym was invented 120 years after the sandwich.

The parallel to financial modelling is direct: just because an explanation sounds neat doesn’t make it true. Just because a number looks right doesn’t mean it is right. Verify your assumptions. Check your sources. Don’t build a model on a Peter Kay joke.

The Acronym Problem in Financial Models

But the club sandwich detour led me somewhere genuinely useful: thinking about acronyms in financial models and why they’re a bigger problem than most modellers acknowledge.

Financial modelling is drowning in acronyms. The income statement alone gives you GM, COGS, EBITDA, EBIT, PBT, PAT. Returns analysis brings ROI, ROE, ROCE, IRR, NPV. Project finance adds DSCR, LLCR, ADCR, DSRA, CFADS. Variance analysis needs PY, CY, BU, ACT, YoY, YTD. And every industry has its own layer — BOE in oil and gas means Barrels of Oil Equivalent, not Bank of England, which is a distinction that matters rather a lot depending on whether you’re modelling a North Sea field or a monetary policy scenario.

Here’s the problem: the person building the model usually knows what every acronym means. The person reading the model often doesn’t.

I have a degree in Economics and a master’s in Banking & Finance. I’ve been immersed in financial acronyms for 25 years. And I still encounter abbreviations in models that I have to look up. If I have to look them up, imagine the experience of the board member, the investor, the project sponsor, or the operations director who’s been asked to review the assumptions in your model.

Context Changes Everything

The same acronym can mean entirely different things depending on the context.

MPC could be the Monetary Policy Committee (if you’re modelling interest rate scenarios) or the Marginal Propensity to Consume (if you’re building a macroeconomic model). COS could be Cost of Sales or Change of Scope. NI could be Net Income, Northern Ireland, or National Insurance. LTV could be Loan to Value or Lifetime Value.

In a model, ambiguity is not a minor inconvenience — it’s a potential source of material error. If someone interprets DSCR as Debt Service Coverage Ratio (the annual version) when you meant Debt Service Cover Ratio (the loan-life version), the covenant analysis reads differently. If someone reads LTV as Lifetime Value when you meant Loan to Value, the credit assessment is wrong.

And these aren’t hypothetical risks. I’ve reviewed models where the same acronym was used for two different things on different sheets. I’ve seen models where a reviewer misinterpreted an abbreviation and signed off on a set of numbers that meant something different from what they thought.

The Fix: A Glossary in Every Model

The solution is simple and costs almost nothing: put a glossary in every model.

A single sheet — call it “Glossary” or “Definitions” — that lists every acronym, abbreviation, and technical term used in the model, with a plain-English definition. Not a generic finance dictionary copied from the internet, but definitions tailored to the specific model and the specific client.

In a project finance model: “DSCR — Debt Service Cover Ratio. Calculated as cash flow available for debt service (CFADS) divided by total debt service (interest plus scheduled principal repayment) in each period. The minimum DSCR across the forecast is the key covenant metric.”

In a PE acquisition model: “IRR — Internal Rate of Return. The annualised effective compounded return rate to equity investors, calculated on a post-tax, post-carry basis from initial equity injection to exit proceeds.”

These definitions do three things:

They remove ambiguity. Everyone reading the model understands each term the same way.

They force the modeller to be precise. Writing a definition makes you think about exactly what you mean. If you can’t define it clearly, you probably haven’t modelled it correctly.

They make the model accessible to non-specialists. Not everyone who uses a financial model has a finance background. The operations director reviewing the capex assumptions, the legal team checking the covenant calculations, the non-executive director asking about the sensitivity analysis — these people are smart, but they may not know what LLCR stands for. A glossary respects their intelligence while giving them the information they need.

The Wider Point: Models Are Communication Tools

A financial model is not just a calculation engine. It’s a communication tool. It communicates assumptions, logic, and conclusions to people who need to make decisions.

If any part of that communication is ambiguous — whether it’s an undefined acronym, an unlabelled sign convention, an unexplained methodology, or a row label that assumes insider knowledge — the model fails at its primary job.

The best models I’ve reviewed over 25 years share a common characteristic: you can pick them up cold, with no briefing from the builder, and understand what they do, how they work, and what the outputs mean. That doesn’t happen by accident. It happens because the modeller treated clarity as a requirement, not a nice-to-have.

A glossary is the cheapest and easiest step you can take toward that standard. It takes 30 minutes to write. It saves hours of confusion. And it signals to the reader that the modeller has thought about them, not just about the maths.

So, About That Sandwich

The club sandwich isn’t an acronym. It’s named after a gentlemen’s club in 1890s New York. The “Chicken and Lettuce Under Bacon” story is a joke from a sitcom.

But if it makes you think about acronyms next time you’re working on a model — and more importantly, if it makes you add a glossary sheet — then Peter Kay has done more for financial modelling best practice than he’ll ever know.

Will Wardle is the founder of Financial Modelling Consultants. He holds a BSc in Economics and an MSc in Banking & Finance (Distinction), and spent five-plus years in KPMG’s business modelling team, where he developed the firm’s peer review methodology and built its internal modelling add-in. He has eaten more club sandwiches than he cares to admit.