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Financial Modelling in a Firm

2019/2020
Учебный год
ENG
Обучение ведется на английском языке
3
Кредиты
Кто читает:
Школа финансов
Статус:
Курс по выбору
Когда читается:
1-й курс, 3 модуль

Course Syllabus

Abstract

The Financial Modelling in a Firm Course is aimed to provide students with the skills necessary for applying excel as a tool to provide models to make corporate financial decisions. The course explores the best practices of financial modelling according the existent modelling guidelines. Students will learn how to build a financial model, how to create a correct system of financial statements and forecast the changes in firm’s future cash flows under different scenarios. Using practical cases, you will find out how to build financial models that are flexible, appropriate, transparent and structured and correspond to the specific financial question. You will also discuss how to make a model user-friendly and audit the quality of the models. Finally, you will get acquainted with the methods of model presentation to the different types of audience.
Learning Objectives

Learning Objectives

  • how to apply models for financial decision-making
  • how the valuation technics could help in financial modelling
  • how to create a template in Excel, that will allow building a model that is flexible and intuitive
  • how to check that the model is correct
  • how to audit the financial model
  • how to incorporate scenario analysis in forecasting firm’s future cash flows
  • how to present a model using a dashboard, charts, etc
Expected Learning Outcomes

Expected Learning Outcomes

  • - consolidation of the foundations and development of specific skills of financial modelling
  • - development of a modern system of knowledge and skills that allow to build a financial model of the business depending on task specificity
  • - using the skills of collecting, processing, analysing and systematizing information for compiling a financial model
  • - understanding the principles of building financial models for companies from different markets
  • - use of tools for sensitivity analysis and scenario analysis
Course Contents

Course Contents

  • Introduction to financial modelling
    Introduction. Aims of financial modelling. Project finance, business valuation, portfolio analysis. Professions to use the financial modelling. Financial modelling as a tool for corporate decision making. To the right and down principle. Copying across principle. Financial modelling standards. FAST standard. SMART guidelines. Excel possibilities. Major rules and principles in modelling in Excel. Future of financial modelling.
  • Building a model. Financial statements
    How financial model works. Functions: rules of usage. Date and time functions. Styles. Conditional formatting. Referencing. Naming. Errors: how to find and how to deal with messages. Circular referencing. What if analysis. Text functions. Interrelation of blocks. Inputs for a financial model. Internal versus external inputs. Corporate, industry and macro data. Financial statements analysis. Income statement. Revenues, costs of goods sold, operating expenses, taxes. Income statement. Extracting and normalizing the historic data. Retained earnings reconciliation. Cash flow statement. Capital expenditures. Fixed assets. Extracting and normalizing the historic data for the cash flow statement. Balance sheet. Working capital. Cash balance. Statements checks.
  • Forecasting. Financing, discount rate and DCF
    Forecasting. Income statement forecast. Cash flow statement forecast. Balance sheet forecast. Sensitivity analysis. Forecast of free cash flows. FCFF. FCFE. Cost of capital. Discounted cash flow model. Scenarios. Sensitivity analysis.
  • Model analysis and auditing
    The model development process. Scope and design. Worksheet design. Separate worksheets by type: Foundation, Workings, Presentation and Control Methods of model presentation. Financial ratios and analysis in financial modelling. Industry and task cases. Dashboard, control board. Audit of the model.
  • Best practices of financial modelling applications
    Comprehensive forecasting. Working capital calculations. VAT payable forecast. Financing requirements. FCFE forecasts based on adjusted net profit. FCFE forecasts based on FCFF adjustment. Multipliers. Excel functions & shortcuts. Use of the VLOOKUP, INDEX, MATCH functions. Data Table for sensitivity analysis. OFFSET function for scenario analysis. TRANSPOSE function. Dashboard and control panel.
Assessment Elements

Assessment Elements

  • non-blocking Домашнее задание
  • non-blocking Посещаемость
  • non-blocking Выполнение групповых заданий
  • non-blocking Финальное задание
Interim Assessment

Interim Assessment

  • Interim assessment (3 module)
    0.4 * Выполнение групповых заданий + 0.15 * Домашнее задание + 0.1 * Посещаемость + 0.35 * Финальное задание
Bibliography

Bibliography

Recommended Core Bibliography

  • Damodaran, A. (2012). Investment Valuation : Tools and Techniques for Determining the Value of Any Asset (Vol. 3rd ed). Hoboken, New Jersey: Wiley. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=edsebk&AN=442924

Recommended Additional Bibliography

  • Day, A. L. (2012). Mastering Financial Modelling in Microsoft Excel 3rd Edn : A Practitioner’s Guide to Applied Corporate Finance (Vol. Third edition). Harlow: FT Press. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=edsebk&AN=1419889
  • Hitchner, J. R., Mard, M. J., & Hyden, S. D. (2013). Valuation for Financial Reporting : Fair Value, Business Combinations, Intangible Assets, Goodwill, and Impairment Analysis. Hoboken, N.J.: Wiley. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=edsebk&AN=1102750
  • Ian Beaman, Erwin Waldmann, & Peter Krueger. (2005). The impact of training in financial modelling principles on the incidence of spreadsheet errors. Accounting Education, (2), 199. https://doi.org/10.1080/0963928042000229699
  • Koller, T., Goedhart, M., Wessels, D., Copeland, T. E., & McKinsey and Company. (2005). Valuation : Measuring and Managing the Value of Companies (Vol. Completely rev. and updated 4th ed., University ed). Hoboken, N.J.: Wiley. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=edsebk&AN=139659
  • Pereiro, L. E. (2006). The practice of investment valuation in emerging markets: Evidence from Argentina. Journal of Multinational Financial Management, (2), 160. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=edsrep&AN=edsrep.a.eee.mulfin.v16y2006i2p160.183
  • Rees, M. (2008). Financial Modelling in Practice : A Concise Guide for Intermediate and Advanced Level. Hoboken, NJ: Wiley. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=edsebk&AN=319172