Be it Investment Banking, Equity Research or any other field involving financial analysis, Financial Modelling is the most crucial skill that you need for these professions. However, when it comes to choosing the right course, confusion reigns high on every student’s mind. More so in today’s world where there are a plethora of institutes offering courses in Financial Modelling, both online and offline.
So how do you choose the best financial modelling course for yourself? Well, given below are a couple of factors that you may want to consider for making a prudent decision.
1. How modellers value companies in real life
The aim of Financial Modelling is to equip you with hands-on skills that can see you through the worst difficulties. Hence the training should be focussed on handling real life cases in the Investment Banking or Equity Research fields. The more the inclusion of projects and practical scenarios, the better you will fare when actually building models on the job. You will be aware of the issues that might crop up and also be armed with all the tricks and hacks to surmount those glitches.
2. Good mix of practical and theory
While it is true that training on the financial model should focus on practical cases, the theory also plays an important role in strengthening the concepts. Basics such as Time value of money, Macroeconomics, Corporate Finance and Financial Management are as important as excel proficiency because, for building models in various scenarios, you need to have a strong foundation of core concepts. Without this, you will find it rather difficult to analyse macro level factors such as changes in the business cycle, seasonality of revenue, changes in Weighted Average Cost of Capital, fluctuation in interest and tax rates etc. Choose a course which promises a good blend of theory with practical knowledge.
3. Complete training on advanced excel
Sound excel skills are the key to building good financial models. Considering this, a course which teaches you advanced excel tools is your best bet. Pivot tables, Vlookup, Hlookup, Scenario Building, Graphs/charts etc. are some of the tools which are a must learn for financial modelling. Moreover, the course must also teach you other advanced technical skills like Macros/VBA, circular referencing, sensitivity and scenario analysis etc. SQL is one of the most important tools for running queries and a knowledge on that would definitely be an added advantage.
4. All methods of valuation are included
Most of the financial modelling courses focus on only one method of valuation, which is the Discounted Cash Flow method. While this is the most widely used methods, other valuation methodologies like Sum of the Parts (SOTP), Comparable Company Analysis, Leverage Buyout Analysis or Precedent Transaction Analysis are equally relevant in different scenarios. A brief introduction to each of these methodologies and explanation regarding their application would give you a holistic view of things rather than just getting a one-dimensional knowledge.
5. Sector-wise training is provided
For building a good financial model, it is very important to first understand the business model of a particular company. This also calls for in depth knowledge of the dynamics of a particular sector. The revenue and cost drivers of a company from telecom sector will be entirely different from that of an IT sector. A model of Reliance Jio will deal with ARPU, Churn rate, Subscriber Base etc, while a model of Infosys will deal with Billing rates, Utilisation rates, Full-time resources (FTEs) etc. Hence, exposure to just one sector and skipping the other sectors completely will not do complete justice to the financial modelling training. It is best that you choose a course that offers good coverage of most of the prominent sectors, if not all.
6. Exposure to all kinds of models-Project Finance, M&A, Credit Analysis
The application of financial modelling is widespread. Not only is it used to arrive at the intrinsic value of a stock, but also to predict cash flows and Internal Rate of Return (IRR) in Project Finance. Similarly, for credit risk analysis, the Financial model is used to evaluate the expected cash over the future years and whether they are sufficient to cover the interest and principal payments. The M&A models on the other hand focus on valuation of the target company, evaluate the payment options and estimate revenue and cost synergies of both target and acquirer.
Your selection of a financial modelling course should focus on learning as many types of models as possible. You may want to specialise in one kind, but your doors will always be open for other opportunities as well.
7. Learning domestic as well as global companies/ financial statements
It’s intriguing to learn financial models of large MNCs such as Infosys, Accenture, Apple because each of these companies contains divisions/sub-divisions which teach the nuances of divisional financial reporting, analysing the revenue mix and understanding the impact of global factors on the company operations. However, as an expert financial modeller, you must also have thorough knowledge about domestic companies and their operations. The pattern of financial reporting of Indian companies, the divisional break-up and the working on the domestic interest and tax rate cycle. So ideally your selection of the financial modelling course should also take the coverage of companies into consideration.
8. Flexibility in learning
This is the age of flexibility and if you are a working professional or a full-time student, you would want a course that allows you to continue with your current pursuits. Hence, choose a financial modelling course that offers blended learning pattern. Nowadays there are many institutes which offer courses that not only offer classroom learning but also virtual learning and online study materials. Wherein you can pursue the course at your own pace.
9. Practice Opportunity
The only way to become perfect in financial modelling is through practice. The more the practise opportunities offered by a course, the better it is. Self-involvement in the process through capstone projects, case studies and other practise models of companies across the sector will help to sharpen the acquired skills.
10. Faculty should be highly qualified with enough industry experience
No matter how good the curriculum of financial modelling is, it’s futile if the faculty is not able to pass on the knowledge in the most practical way. Therefore, before selecting the course, make sure that the faculty members are highly qualified such as CAs, CFAs or MBAs and have adequate industry experience in financial modelling. Another point to consider is the availability of the faculty members for doubt-solving and exam guidance.
11. Certification provided by leading industry bodies
Only doing a financial modelling course is not sufficient. There needs to be enough credibility of that course in the market, and certification by a reputed industry body goes a long way in ensuring this. There are financial modelling courses which offer certification from the National Stock Exchange, Bombay Stock Exchange or other leading corporate bodies. Certification is a way to guarantee about the standard of knowledge, quality of the curriculum and its industry relevance. So while choosing a course make sure that you also check out if they are associated with a leading industry certification.
12. Placement assistance is provided
In the real corporate world, you have to make a mark through sheer hard work. However, placement guidance in the right direction is definitely required. The Financial Modelling courses which actually aim at creating industry experts will not be limited to just certification. They would indeed go a step further and groom the students for resume writing, interview training, group discussions and mentoring. So keep these in mind and choose wisely.
It’s your career. Take your pick smartly.
Financial modelling skill is crucial in the job world today. Any profile in financial analysis demands thorough knowledge of financial modelling—conceptual and practical. So don’t get misguided and make a prudent choice. After all, in depth knowledge and confidence will help you to make the cut above the rest.