Modelling Financial Statements

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Overview

Learning to model an integrated and consistent set of Financial Statements is a foundational skill for anyone working in a finance or finance related role. It requires 3 core areas of competency:

  • An understanding of core accounting concepts
  • An ability to apply the accounting concepts to design internally consistent “model logic”
  • Excel skills that accurately and efficiently convert “model logic” into “spreadsheet logic’

These skills are traditionally taught by an instructor over the course of a 2 or 3 day program. While this type of training has its place, time constraints and the differing skill level of course participants often makes it difficult for an instructor to comprehensively cover all three competency areas to the extent required.

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Course Overview

The objective of this Course is to overcome this limitation by eliminating this artificial time constraint and allowing each participant to work through a comprehensive coverage of the core competency areas at his/her own pace. It also allows plenty of time and opportunity for participants to reflect on and review areas requiring deeper study.

Over 45 concise modules, this course takes the participant step by step through the process of building a model from a blank spreadsheet. Multi-media elements such as animated diagrams, screen shots and video content are fully leveraged to provide an engaging and effective learning experience. Comprehensive instructor support is provided via e-mail, phone conferencing and screen sharing webinars.

 
By the end of the course, you will:

  • Understand what is meant by an integrated set of financial statements
  • Know what each line item on the Income Statement, Cash flow Statement and Balance Sheet represents and how it interacts and effects line items on other financial statements
  • Be able to analyse historic data to determine key relationships
  • Have knowledge of the advantages and pitfalls of different forecasting techniques
  • Understand the “drivers” for each line item and how to make defensible and consistent model assumptions
  • Recognise modelling best practice (setup & structure, number conventions, consistency, using formulae and functions, conditional formatting, shortcuts etc.) and how this avoids errors and promotes efficiency and transparency 
  • Have gained a systematic modelling process and methodology that eliminates errors and time consuming troubleshooting by ensuring the balance sheet is balanced at every step during the model building process
  • Have developed a deep understanding of the linkages between the financial statements and how to deal with modelling circularities
  • Improved knowledge of key management ratios and how to model them
  • Have built a comprehensive and integrated 3 statement  model for a real multinational company, using real data, starting from a clean spreadsheet
  • Know  how to use the model to carry out sensitivity analysis and scenario analysis

 
Each step of the model building process is clearly explained with screenshots, animated diagrams and video content. “Check” spreadsheets are provided so you can check your work at each step along the way. 

 
Time requirement

The course takes between 20-25 hours to complete. 

Who should attend

  • Credit Analysts
  • Corporate Finance Executives
  • Business / Corporate Bankers
  • Accountants
  • CFO's & Corporate Treasurers
  • Investment Bankers
  • Leveraged Finance specialists
  • Merger and Acquisition specialists

Related Courses

Agenda

 
This course is broken down into several core elements in which you will:

 

1. Start from first principles

  • Begin with an exploration of the Income Statement, Cashflow Statement and Balance Sheet
  • Each line item in all three statements is discussed along with the key linkages between the financial statements
  • Understanding is reinforced through discussion of accounting concepts and use of detailed examples that clarify topics such as:
      - Different methods of calculating tax and accounting depreciation
      - Valuing inventory
      - Calculation of current and deferred taxes
      - Direct and indirect methods of calculating operating cashflow
  • Implications for modelling are flagged throughout the discussion

 

2. Learn about modelling best practice, including how to: 

  • Set up your model structure so that it is easy to understand
  • Build consistency into your worksheets to avoid errors
  • Input model assumptions in a way that allows the flexibility to carry out sensitivity and scenario analysis
    use cell formatting for clarity
  • Build in “Error Checks” that flag errors at each step through the modelling process
  • Avoid formulae that are hard to understand
  • Use clear number conventions to avoid errors
  • Avoid risky practices such as the use of hard coding

 

3. Improve your Excel skills

  • Excel Functions
  • Excel Keyboard Tips
  • Excel Shortcuts
  • Different types of Excel Error Messages and how to fix them
  • Using Excel Cell Styles for formatting
  • Using Conditional Formatting to highlight errors

 

4. Leverage multi-media to learn key concepts

  • Animated diagrams
  • Screenshots
  • Video content
  • Review as many times as required

 

5. Follow step by step instructions

  • View screenshots with step by step instructions
  • Watch videos that bring it all together
  • Download pdf "Notes" for future reference
  • Check your work against completed spreadsheets at each step along the way

 

6. Learn about key management ratios

Learn about the four categories of management ratios, their uses and their weaknesses. Learn to model them on your spreadsheet:

  • Liquidity Ratios e.g. Current Ratio, Quick Ratio
  • Profitability Ratio e.g. Gross Margin, Operating Margin
  • Efficiency Ratios e.g. ROA, ROE and ROCE
  • Leverage Ratios e.g. Debt-Equity Ratio, Capitalisation Ratio

 

7. Learn how to carry out various types of analyses

  • How to setup your model for Sensitivity Analysis and identify key risk factors
  • How to setup for and carry out Scenario Analysis
  • How and when to use a Change Log
Why us


We have a combined experience of over 60 years providing learning solutions to the world’s major organisations and are privileged to have contributed to their success. We view our clients as partners and focus on understanding the needs of each organisation we work with to tailor learning solutions to specific requirements.

We are proud of our record of customer satisfaction. Here is why you should choose us to help you achieve your goals and accelerate your career:

  • Quality – our clients consistently rate our performance ‘excellent’ or ‘outstanding’. Our average overall score awarded to us by our clients is nine out of ten.
  • Track record – we have delivered training solutions for 95% of worlds’ top 100 banks and have trained over 250,000 professionals.
  • Knowledge – our 150 strong team of industry specialist trainers are world leading financial leaders and commentators, ensuring our knowledge base is second to none.
  • Reliability – if we promise it, we deliver it. We have delivered over 20,000 events both in person and online, using simultaneous translation to delegates from over 180 countries.
  • Recognition – we are accredited by the British Accreditation Council and the CPD Certification Service. In an independent review by Feefo we scored 96% on service and 95% on product