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Building Financial Models in Excel

 

Building Financial Models in Excel – Two Day Programme 


Introduction

This workshop is designed to teach delegates how to build a complete Excel model. It starts with a discussion of common Excel errors and shows how to combine Excel features and techniques to build better models which contain fewer errors and generate more management information.

In particular the workshop explores:

• Model design techniques
• Modelling integrated statements
• Forecasting
• Financial mathematics
• Risk and sensitivity
• Reporting and dashboards
• Gain hands-on modelling experience


Module 1 Financial Modelling and Model Planning

  • Overview of the course - building a model
  • Avoiding Excel modelling errors
  • Basic information e.g. timelines and version control
  • Exercise: setting up model framework


Module 2 Income Statement and Balance Sheet

  • Extracting data from annual reports
  • Adding income and balance sheet
  • Model checks on consistency
  • Exercise: completing and checking the initial statements


Module 3 Cash Flows and Ratios

  • International cash flow statement
  • Required financial ratios - profitability, liquidity, structure, market
  • Modelling issues
  • Model self-checks
  • Exercise: adding cash flow and ratios to template


Module 4 Forecasting Methods

  • Review of historical performance
  • Identifying and forecasting key drivers
  • Linkages and modelling problems
  • Exercise: reviewing performance and adding a forecast

Module 5 Free Cash Flows

  • Derivation of free cash flow
  • Checking model results and redefining forecast
  • Reasonableness of forecast and results
  • Exercise: adding free cash flow to the model


Module 6 Initial Equity Valuation

  • Cost of capital
  • Methods of adding terminal value
  • Producing an equity valuation
  • Exercise: adding equity valuation to the template


Module 7 Risk and Sensitivity

  • Understanding of risk and multiple answers
  • Sensitivity and matrices
  • Scenario planning
  • Exercise: testing the models with different sensitivities


Module 8 Management Reporting and Model Review

  • Management reporting and summary
  • Exercise: adding reporting to the financial model
  • Final audit
  • Help and user assistance
  • Documentation and maintenance


Questions and Answers