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Modeling Financial Statements

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Disclaimers Prerequisites Bio Overview Help Materials Assignments Grading Schedule

Overview

Various management disciplines teach you how to analyze and forecast parts of a business. Building on this foundation, this course will help you weave your forecasts into coherent spreadsheet-based pro-forma financials. Modeling and projecting comprehensive financial statements provides a reality check on the forecasts, enables "what if" analysis, provides an integrated view of the business, and is a key step in valuation.

 

The course will start from conceptual examples that illustrate the key intuition and explain linkages between financial statements. It will then build on these examples to forecast the financial statements of real companies.

Disclaimers

This course is for you if you need to build models for your job. I do not intend to insult you with the statements below, but please do not take this course if the following applies to you:

Prerequisites

Help and Office

Materials

Assignments

Exams and Grading

 

The grades will be based on the final exam (50%) and one project (50%). The assignments are not formally graded but can affect your grade adversely if you do not complete them on time. It is not necessary for you to get a full score, but you must show due diligence in completing the assignments. The final exam will not be rescheduled for any reasons except medical or family emergencies. Work commitments will not be a valid reason for rescheduling.

Schedule

I am teaching three sections of this course in spring. All classes are held in KMEC 3-120.

Class Topic
1
  • Building and debugging a comprehensive model: Operating and investing activities
2
  • Building and debugging a comprehensive model: Financing activities
3
  • Financing and iterations
4
  • Value drivers and components of a model; Free cash flows and return on investment metrics
5
  • Modeling multiperiod effects: PP&E, long-term accruals and deferrals
6
  • Taxes
7
  • Taxes
8
  • Modeling uncertainty: Allowances and reserves
9
  • Modeling misclassified cash flows: recurring "non-cash" acquisitions, "non-cash" stock compensation, "non-cash" capex via leases
10
  • Mergers and acquisitions
11
  • Mergers and acquisitions
12
  • FINAL EXAM