What is Financial Modeling?
Financial Modeling teaches you to work with historical information on companies and analyze the company / industry performance on relevant financial parameters. This analysis is then used as an input to build financial models. These models then project the future financial performance of the companies analyzed and hence give us an estimate of the valuation of the companies.
Applications of Financial Modeling in Finance:
- Investment Banking: Financial Modeling is the basic tool of any Investment Banker. It is used to value the company by forecasting its revenues & financials. With the valuation as a foundation the banker can then recommend the buyer or seller on acquisition of funds or investments in funds respectively.
- Equity Research: Financial Modeling aids analysts in investigating an organization’s financial projections, competitor’s projections and other dynamics to determine the risk and estimate the return behind any investment.
- Credit Rating: Financial Modeling enables Credit Analysts to translate historical information such as outstanding debts into growth forecasts. These forecasts then determine the nature and degree of various risks which is then collated to give a rating to a firm.
- Project Finance: Financial Modeling is very useful in assessing the financial viability of a project. It is also the primary tool used to create a funding plan using relevant debt and equity components
- Mergers & Acquisitions: Financial Modeling helps organizations in assessing the value of any company. It hence gives them clarity about any “merge or acquire” decisions by forecasting the revenues, preparing debt schedules and by performing competitors’ analysis.
- Corporate Finance: Financial Modeling is used by companies to assess their own finances and projects. It is hence an input in creating funding plans for corporate projects.
Application of Financial Modeling in non-finance areas:
- Critical Thinking and Analytical Skills: Critical thinking and analytical skills are two of the most important skills required of any manager. These skills are a by-product of your financial modeling training. Preparation of a financial model requires analyzing different options critically. Every model that you create hones these skills further.
- Business Plan Preparation: Another necessary prerequisite for a manager is the preparation of diverse reports such as business plan reports, project reports and revenue/ cost projection reports. Financial Modeling provides you with relevant skills that are helpful to understand business plans for a range of sectors.
- Excel Proficiency: Excel is the staple tool for all quantitative analysis across industries and across departments. In Financial modeling, trains you in Excel right from the start of the course ensuring that you gain reasonable proficiency by the end of the course.
- Decision Making: The daily life of a manager is replete with situations that involve decision making. Financial Modeling helps you in quantifying the situations and hence aid you in decision making by comparing different scenarios.
- Theory to practical: In the past, you may have learnt various topics such as financial statements, accountancy, economics, budgeting and financial management, theoretically. Financial modeling elucidates the practical applications of these theories.
|1. Excel Proficiencey|
• Formatting of Excel Sheets
• Use of Excel Formula Function
• Advanced Modeling Techniques
• Data Filter and Sort
• Charts and Graphs
• Table formula and Scenario building
• Lookups: Vlookup
• pivot tables
2. Financial Statemment Analysis (Based on CFA level I syllabus)
• Introduction to Financial Statement Analysis
• Financial Reporting Mechanics,
• Understanding Income Statement, Balance Sheet,
• Cash Flow Statement,
• Financial Analysis Techniques,
• Inventories, Long Lived Assets,
• Non Current Liabilities,
• Financial Statement Application
|3. Financial Ratios (Based on CFA level I syllabus)|
• Ratio analysis of industries
• Du point Analysis
• Peer to peer analysis
• Preparation of Financial Analysis report on an industry
|4. Financial Management & Corporate Finance (Based on CFA Level I Syllabus)|
• Time value of money
• Long term financing
• Cost of capital
• Measure Of Leverage
|5. Project Finance Modeling|
• Why Project evaluations
• Stage of project
• Construction & development phase
• Funding during investment phase
• Costs during investment phase
• Life of project; decision making
• Cash flow waterfall & resolve circular reference problem in interest during construction
|6. Equity Research - Modeling (You will learn how to prepare Indian & international Equity models from scratch)|
Prepare an Income Statement, Balance sheet, Cash Flow Statement, Geographic Revenue Sheet, Segment Revenue Sheet, Cost Statement, Debt Sheet, Analyze Revenue Drivers.
Forecast Geographic Revenues, Segment Revenues, Geographic Revenues,
Cost Statement, Debt, Income Statement , Balance Sheet, Cash Flow Statement.
Performa Adjustments, Income Statement - Compute Margins, Balance Sheet -Compute Ratios.
Cash Flow Statement Projection, Valuation- Discounted Cash Flow Method (DCF), Valuation Prepare Valuation Model, Prepare Presentation Sheet, Prepare Company Overview , Sector Overview
|7. Report Writing & Sector overview|
• Report Writing: On the basis of Financial Modeling,
• Overview of different sectors such as retail, telecom, IT, Oil & Gas etc.
|8. Financial Modeling - NSE India Certification Exam||After completion of above topics students have to take the Financial Modeling Certification Exam. On clearing the exam, students will get Financial Modeling Certificate & will become eligible to undergo training of below topics on VBA, Macros and Investment banking.|
|9. Advance Macros & VBA for Finance|
• Understanding Macros and VBA,
• Understanding Macros and VBA,
• Recording Macros,
• Stepping into the code,
• Understanding basics of coding,
• Understanding objects and control statements in VBA code,
• Application of macros to Financial modeling :
-Developing solution to circular reference problem
-Developing sensitivity table
-Developing scenario analysis
-Examples will be based on project models.
|10. Investment Banking – Merger & Acquisitions|
• Introduction to Investment Banking -Merger and Acquisitions
• Types of M&A: Merger ,Acquisition ,Consolidation ,Spin-off
• Drivers for M&A
• Accounting for Mergers: Purchase Method & Pooling Method
• Differentiate between financing and operating synergies
• M&A Regulatory Environment
• Developing M&A Models:
Integration of Financial Statements between
(Target and Acquirer)
-Valuation -DCF, Relative and Transaction Comps
-Developing Merger Model
Introduction to Databases
- Terminologies - Records, Fields, Tables
- Introduction to database normalisation
- Primary Key
- How data is accessed
Introduction to SQL
- SQL Syntax
- SQL data Types
- SQL Operators
- Table creation in SQL : Create, Insert, Drop , delete and updating
Introduction to SQL - Table access & Manipulation
- Select with Where Clause (In between, logical operators, wild cards, order, group by)
- SQL constraints
- Concepts of Join - Inner, Outer
|12. Capstone Project |
Benefits of Capstone Project:
• At the end of this Capstone, you'll be able to ask the right questions of the data, and know how to use financial data effectively to address business challenges of your own.
• Once you are done with the Project, you'll be better prepared to do Valuation of a company and will able to come out with the Report.
• If you dont have relevant experience in Financial Modeling, then with the help of Capstone project you can show your expertise in the job interview.
• Additional Certificate on Capstone Project from IMS Proschool
- On successful completion of training and assessment on VBA & Macros for Finance & Investment Banking – M & A, Capstone Project, candidates will get two Certificates from IMS Proschool on “ Advance VBA & Macros for Finance” & Investment Banking – M & A”
- Training of Advance Macros , VBA, Investment Banking – M&A will be conducted through Live Virtual Classroom.
- Additional Certificates & training for only those candidates who have completed the NCFM (NSE India) Certification within 6 months of Enrollment date.
- Join IMS Proschool for the Financial Modeling Program
- Complete training of the Financial Modeling program through any mode viz Classroom/ Virtual Classroom/ Distance Learning
- Complete quiz 1 & 2 with minimum 70%.
- Select your Project for assessment and submit the assessment with minimum 70%
- Fill the exam form on the Proschool website with NCFM ID. If you don’t have an NCFM ID, you can visit www.nseindia.com : - Education : - Online Register/Enroll
- Once you get a confirmation email from Proschool, select the exam date ( All days & venues in 85+ centers)
- Take the exam at NSE India or NSEIT Centers.
- Clear the NSE India Certification on Financial Modeling and get an additional 30 hrs training on Advance Macros, VBA & Investment Banking – M&A through Live Virtual Classroom
About the IMS Certification Examination:
- The Certification Examination will be conducted at 85 NSE Centers.
- The exams are conducted on a daily basis.
- The examination is a computer based test and will comprise multiple-choice questions.
- Exam will be out of 100 marks (30 questions) and duration of the exam is 2 hrs.
- The students will receive their scores immediately after the exam.
- Exam Grades: 50% to 59%: C Grade, 60% to 74% B grade, 75% or above 75 % A Grade. No negative marking.
- Those who fail the examination can reappear for the exam by paying the exam fee of Rs.1700 + GST . There is no limit on the number of attempts.
- Certification from NSE India is valid for lifetime.
- After you clear the NCFM Financial Modeling Certification & complete training on Advance Macros, VBA & Investment Banking – M&A, the students will also get two certifications on Advance Macros, VBA & Investment Banking – M&A from IMS Proschool
- IMS Proschool and its parent organization has educated more than 3 lakhs candidates for different competitive exams and professional course such as CFA, CFP, CIMA, CPA etc.
- Proschool has also trained 16,000+ employees of reputed financial organizations such as ICICI Bank on Financial Analysis, Wealth Management, Financial Planning, Equity Research etc.
- Proschool offers Financial Modeling Certification in association with NSE Academy(NSE India) which is India’s largest Finance Certification body. Certifications from NSE Academy(NSE India) are well-recognized by all the companies in India.
The Proschool Training Program
- Understand and work with the Financial Models of more than 6 sectors such as Oil & Gas, Retail Sector, Telecom Sector, IT Services, IT Products, Entertainment Sector
- Learn Project Finance and Modeling for Project Finance
- Course designed and executed by professionals from the IIMs & CFA Institute
- 60 hrs video or 10 weeks Live Class on how to prepare financial model from basics
- Another 30 hrs of tutorials on "Advance Macros & VBA" & "Investment Banking - M&A" through Live Virtual Classroom even after the completion of Financial Modeling Certification.
- India's leading book on Financial Models with reference to an Indian Company
Financial Modeling FAQ's
After completion of training & exam, candidates will get Certification from NSE India – India’s largest certification body in Finance. This certificate is well-recognized in the corporate world and hence it communicates your knowledge of Financial Modeling to employers quite clearly.
Along with this, Proschool has developed one of the most exhaustive and regularly updated training materials for Financial Modeling. This includes India’s first book on Financial Modeling with reference to an Indian company, Audio – Video training modules, reference models of national and international financial models etc. All these resources aid you in learning financial modeling comprehensively.
Project finance deals with long term financing of infrastructure and industrial projects, based upon the projected cash flows of the project instead of the balance sheets of the project sponsors. It is quite attractive to the private sector because of the ability to fund major projects off the balance sheet. For instance, if Reliance Infrastructure wants to build a metro in Mumbai, they will need huge investments for the project. An investor will invest in Reliance Infra after evaluating the potential cash flows from this project.
Financial Modeling will train you to prepare such project finance models, forecast revenues, evaluate projects and finally present a project finance report to the investors. We have prepared a special module in the Financial Modeling program for Project Finance.
The primary role of an equity research analyst is to analyze companies in order to find possible investments. Sell-side equity research provides its research to the clients. Buy-side equity research is when the analysts perform research to invest in their firm's money (e.g. mutual funds, hedge funds etc).
In Financial Modeling, you will learn how to discover the financial condition of a company and its future growth prospects. Based on this you will carry out valuations of a company and prepare a research report.
As we have seen, Financial Modeling also helps investors to find companies where they can invest for better returns. Usually, the Investment Banks also end up helping/advising their clients on how to manage their financial assets.
Financial Modeling assists the investment bankers to do the valuation of the companies. If you want to get into Investment Banking, then Financial Modeling has proven to be a pre-requisite.
Credit Analysis is primarily used to check the creditworthiness of a company which wants to raise money. In such cases, the analysts observe the past performance of the company to evaluate whether the company can meet its financial obligations. In India, companies that want to raise debt from the market will get a credit rating from the rating house. Based on this rating, they can raise money from the market. With a better rating, more funds will be generated with a lower interest rate.
Financial Modeling equips Credit Analysts in collecting historical information as well as outstanding debts and forecasting the future growth on excel to determine the nature and degree of risk factors, which helps him/her in giving the rating.
In corporate banking, most of the work deals with lending money to institutions and/or projects. Financial Modeling helps you to evaluate them and fund the projects/intuitions which are Financially Viable.
If you are pursuing an MBA in Finance and want to make a career in any of the financial sectors such as Equity Research, Investment Banking, Project Finance, Corporate Finance or Credit Research then Financial Modeling will definitely be a big part of your job profile. You will learn practical applications of the theory subjects that you have learnt in your MBA such as Financial Management, Accounts and Economics. In Financial Modeling, you will learn Excel in both its basic and advanced avatars. Lastly, it will also help you to improve your profile vis-à-vis other candidates of your institute.
Earlier, most of the job opportunities in the field of finance such as Financial Research, Equity Analysis, Credit Analysis where available only to the CAs & MBAs. But with changing job profiles and cost pressures, many companies are hiring fresh graduates. If you do Financial Modeling, then your chances of being selected for a research job increases substantially. Moreover, many opportunities are opening up in the field of Financial Research and KPOs where they hire Graduates. Financial Modeling will also provide you to form a solid foundation and understanding for CFA as well.
If you are a CA who doesn’t want to get into the traditional fields of audit, account and tax and instead covets Investment Banking, Private Equity, Equity Research then you should learn Financial Modeling. Moreover, many CAs are involved in Project Finance as well. Financial Modeling will help you to make Project Finance reports using all the contemporary techniques.
CFA would have taught you the theoretical base on valuation, investment banking etc. In Financial Modeling, you will learn how to use this conceptual understanding in the practical world of finance where you will prepare financial models of a company to estimate its valuation.
Financial Modeling not only teaches you about finance but about the overall business. Financial Model preparation involves research in overall business including finance, future opportunities, and competitors. It will help you in Business Analysis, planning of projects, financing of projects, equity market etc. It will develop your critical thinking which is always an asset to work on any project.
I was in the first batch of Financial Modeling. Although I was not sure that I will get a financial research job with my previous background of MIS at L&T Finance, IMS Proschool really made that happen they not only gave me numerous opportunities to attend interviews but also spend quality time with me to prepare for each and every interview. I will always be thankful to IMS Proschool in my life. - Ritesh Sharma (Care Rating)
I am an ex-student of IMS Proschool for the Financial Modeling program. The program has a very focused approach and it helped me start a career in equity research which was my cherished dream for more than 5 years. While hiring Equity Research Analysts we do give preference to IMS Financial Modeling Students.- Rajesh Padmashali (Outlook Profit)
The Financial Modeling course taught me all the practical aspects and skills such as financial statement analysis, project finance and valuation. This helped me immensely to get the role of Sr. Analyst at Ernst & Young. - Shivain Grover/ Sr. Analyst, Ernst & Young
Proschool's Financial Modeling course is truly comprehensive and practical. A big thank you to the placement team for getting me placed at Visible Alpha. - Rajat Kinagi/ Research Associate, Visible Alpha
The Financial Modeling course is designed to meet industry standards. IMS Proschool helped me land a job at Capstone Securities. - Pushkar Bhangale/ Analyst, Capstone Securities
I appreciate the valuable assistance IMS Proschool gave me during my job search and interview process. It would've been hard to get to where I am today. - Akshay Jain/ Analyst, Visible Alpha