Financial Modeling

In most of the jobs that are offered to students post a concentration in finance they will have to model the financial statements of a company in order to forecast its evolution, take key decisions on its development or know its value…

The main objective of the course is to give students the opportunity to implement the various finance skills learnt since the beginning of their schooldays and build an operating model, a DCF, a merger model, and a LBO model (advanced class only), tasks that those who choose a career in corporate finance will have to perform on a daily basis.

Course Objectives

At the end of the course, students are expected to be able to set up an operating model (income statement, balance sheet, and free cash flow statement), a DCF, sensitivities, a merger model, and a LBO model (advanced class only) meeting the level of standards required by investment banks.

Course Content

Introduction to the basic modeling rules and recap of the main accounting principles:

  • Recap of basic accounting concepts used to build a financial model
  • Introduction to the principles of modeling and practice through exercises
  • Presentation to common Excel shortcuts used in modeling
  • Presentation of the ‘choose’ and ‘offset’ functions
  • Introduction to circular references and their use in interest calculation.

Creation of an operating model and of a DCF:

  • Creating an operating model and a DCF step by step
  • Sensitivities around the WACC and the long term growth rate
  • Sensitivities around the EBIT margin and the growth rate.

Creation of a merger model:

  • Creating a merger model step by step
  • Accretion / dilution analysis.

Creation of a LBO model:

  • Creating a LBO model step by step
  • Return calculations for PE funds.