Course Outline Financial Modelling Course 3 Days Overview
This program is designed as a first course for people who would like an opportunity to practise and improve their ability to model cash flows in Excel. The course is conducted in a work shop format, with the emphasis on learning by doing. During the program delegates work as a team to create a cash flow model from scratch.
Case work on the financial modelling course
As part of their work on this course delegates work with their colleagues to build up their own integrated financial statement model, using an interesting case study chosen before training by class participants. Starting from a blank spreadsheet, delegates create a full set of forecast financial statements for the business. Delegates can then choose a scenario to see how the business performs under stress and, for example, how key financial ratios and bank covenant tests change with a change in circumstances. Delegates are guided through a complete model build up and are shown all the steps they need to take. All through the course plenty of guidance and help is given by the course instructor. At the end of the course participants will have a record of their own work and a permanent record of the steps they have taken to create their own cash flow forecast. The course covers: Cash flow modelling Determining debt capacity Developing key outputs for credit analysis Scenario analysis Guidelines for good modelling practice Excel tips and tricks Financial modelling course methodology.
The three days is designed to provide participants with the tools they need to continue with their own modelling efforts as they return to their workplace. Taught by an experienced corporate finance advisor, this is a highly practical course that explores the application of financial modelling to real-life transactions. The course methodology is well proven and regularly receives excellent feedback from corporate and banking institutions, and other participants.
Exploring good financial modelling practice on the course
During the course delegates work to create their own models, establishing and observing spreadsheeting best practice as they progress. Good modelling techniques are observed throughout the course, discussed in groups and demonstrated during the program.
A relevant financial modelling case study, unique to the course and fresh for the training group
Right from the start of training delegates form teams and select their own case study, a business that is of interest to them and relevant to their work.
An emphasis on practical financial modelling group work, and learning by doing
On day one delegates work quickly to develop key linkages within financial statements, and produce key calculations in their financial model. Participants work in groups, sharing their experiences with each other and the course tutor. Just like they might be required to in their jobs, delegates make rapid progress towards building up a core financial model for the case business from scratch. As the course progresses into days two and three course delegates continue to practise and improve their skills, considering more advanced financial modelling topics.
Excel financial modelling help
Early on in the course delegates are surveyed and provided with the opportunity to ask for help with particular Excel functions. During the remainder of the programme, and as delegates continue to work on their models, these functions are demonstrated in class (supplemented with a set of spreadsheet exercises which the class works through together).
Course day 1 core financial modelling build up
Course delegates complete their own financial model build up in pre-set stages. They save their work in clear steps as they go. At the end of the course they have a record of their own work (each completed stage of their model) plus refresher notes supplied by the lecturer. Planning assumptions Obtaining source data Coding inputs Structuring assumptions and anticipating scenario analysis Modelling and formatting best practice Good model structure Good model design
Modelling. Delegates are introduced to a case study and a set of financial statements. Participants use that starting point to begin creating their own model.
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p2
Starting to forecast the income statement
Starting to forecast the P&L from key assumptions How far can we progress? Whats stopping us from continuing? Key drivers for modelling Key ratios driving the forecast Drivers on revenues Drivers on costs Sources of data
Modelling. Course delegates add to their financial model and forecast out the income statement as far as pre-tax earnings.
Modelling fixed assets
Forecasting assets Key drivers on asset intensity Capital expenditure Depreciation Forecasting depreciation
Modelling. Delegates analyse and forecast fixed assets, depreciation and capital expenditure.
Completing the balance sheet
Drivers for balance sheet items Which creditors can we stretch, and by how much? How quickly can we collect debtors? Forecasting the balance sheet Impacts on cash flow Is growth good? Linking to other statements Balancing the balance sheet
Modelling. Course delegates use their financial model to forecast a balance sheet for the case study.
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p3
Course day 2 getting to cash flow, modelling a new deal
Course delegates complete their model. Then they start to look at how to, for example, use the financial model to analyse a new and revised deal structure. Modelling debt Forecasting a simple debt schedule Linking to other statements Tools for resolving circularity Setting debt paydown
Modelling. Delegates forecast a debt pay-down schedule for their case study.
Cash flow
Modelling the cash flow statement Key linkages to other statements Presenting the cash flow statement Forecasting cash flow to equity Forecasting unlevered cash flow
Modelling. Using their model, delegates forecast levered and unlevered free cash flow.
More advanced Excel exercise: modelling a new deal
Developing a new structure for a new deal the client is contemplating Modelling sources & uses of funds Developing a first cut debt structure Calculating refinancing needs The role of working capital and extra cap ex requirements Typical financing and transaction fees The impact on the model: calculating goodwill and the pro-forma balance sheet
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p4
Course day 3 more advanced financial modelling topics Modelling detailed debt structures: determining debt capacity and structuring debt
High level explanation of different debt instruments, with a focus on how you might actually model more complicated debt instruments Senior debt High-yield debt Mezzanine Payment-in-kind Understanding the nature of different financial instruments and risk profiles Modelling waterfall structures Estimating and optimising debt capacity
Modelling. Course delegates look at debt structuring work completed by a major investment bank. Working in teams, can you see what this analyst has done wrong? Delegates work together to do a better job of modelling a complicated debt structure. How can this work be used to test debt capacity for the transaction?
Performing scenario and sensitivity analysis in the financial model
What scenarios make the most sense? How can we structure the financial model to run those scenarios easily? What happens to our outputs as the model is stressed? How can we best present the information? Instant scenario switching with drop down boxes
Modelling. Course delegates develop a suite of scenarios for their model, setting the model up so that it contains a full record of scenarios and the user can switch very quickly between them using drop down boxes.
Defining key outputs in financial modelling
What are the most important outputs? How can they be presented clearly? How can we put for example, anticipated sales, capital expenditure and working capital plans into context?
Modelling. Delegates complete a new sheet within their financial model something that contains key outputs and credit statistics and is quickly and easily readable.
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p5
Excel modelling help
Delegates are provided with the opportunity to ask for help with particular Excel functions Use of these functions is demonstrated in class and supplemented with exercises which the class works through together
Spreadsheet exercises. Useful functions in Excel.
Lessons in good modelling practice
During the course delegates work to create their own models, establishing and observing spreadsheeting best practice as they progress Good modelling techniques are observed throughout the course, discussed in groups and demonstrated during the program At the end their time participants finish with their own modelling work (which they have created following modelling best practice) plus a hard copy and permanent record of modelling tips
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p6
