Financial Modeling Foundations

Course details

Financial modeling helps decision-makers make informed choices based on data analytics that move their firms forward. In this course, learn the essentials of financial modeling with professor of finance Dr. Michael McDonald, Michael covers foundational concepts, practical techniques, and advanced strategies for building and refining financial models. By leveraging Excel's powerful functions and tools, you can gain the skills necessary to construct accurate and insightful financial models that support key business decisions and enhance operational efficiency. Michael shares real-world applications and hands-on exercises that will help you apply these techniques effectively in your professional roles.

Learning objectives
Describe the foundational principles of financial modeling and the critical components required to build robust models.
Develop and link financial statements within a three-statement financial model to ensure coherence and accuracy.
Apply Excel tips and techniques to enhance the efficiency and reliability of financial models.
Perform advanced financial modeling tasks, including sensitivity analysis, scenario planning, and stress testing, to analyze potential business outcomes.
Integrate generative AI tools in financial modeling for tasks such as data gathering, forecasting, and model interpretation to improve model quality and decision-making.

Concepts

Introduction

Using Excel for financial modeling

Financial Modeling Basics

What is financial modeling
Why is financial modeling important
Business questions and financial models
Financial modeling with GenAI
Gathering data from FRED for Excel
Getting started with the project
Excel tips for financial modeling

Corporate Financial Modeling - Three-Statement Financial Model

Foundations of the model
Linking financial statement models
Three-statement financial model
Build the income statement
Build the balance sheet
Build the cash flow statement
Validating the Model

Evaluating Corporate Financial Models - Three-Statement Model

Financial modeling strategies
Sensitivity analysis and financial models
Adding visuals to a financial model

Investment Models - DCF Model

Financial valuation models
Cash flows in the valuation model
Terminal value in a valuation model
Interpreting a DCF model

Banking Models

Beyond the basics in financial models
Corkscrews and models
Waterfalls and models
Adding toggles to a financial model
Model outputs
Hiding tabs and making models readable
Stress testing models

Buyout Models

Interest rate assumptions in models
Discount rates in models
Top-down financial models
Bottom-up financial models
IRR decisions in financial models
NPV decisions in financial models
Limits of financial models

Building and Maintaining Models

Applications of financial models
Bitcoin and cryptocurrency valuation modeling
Updating financial models

Financial Modeling with Generative AI

GenAI and financial modeling
Financial statement construction with GenAI
Building a financial forecast with GenAI
Using GenAI to interpret a financial model
Sanity checking models with GenAI

Conclusion

The future of financial modeling