Course Description
An introduction to current practices in financial modeling. Students will learn how to apply financial models with financial data to perform analysis. This hands-on course provides the skills to apply the theories, concepts, and spreadsheet tools to develop effective financial analysis and decision-making.
Athena Title
Financial Modeling
Equivalent Courses
Not open to students with credit in FINA 4920E
Prerequisite
FINA 3000 or FINA 3000H or FINA 3000E
Semester Course Offered
Offered every year.
Grading System
A - F (Traditional)
Course Objectives
Upon completion of this course, the student should be able to: 1. Evaluate a balance sheet, income statement, and statement of cash flows 2. Build a discounted cash flow (DCF) analysis 3. Build simple models for financial statement analysis and forecasting 4. Create working capital, depreciation, and capital expenditure schedules 5. Perform a sensitivity analysis to match expected financial performance 6. Price simple options 7. Develop strategies for creating a reliable financial model This course requires students to articulate, implement, and reflect on knowledge learned in this and other core finance courses through real-world application. The real-world applications offered, through the lens of financial modeling, are a core component of almost all finance-related employment. Students will be challenged to create and also reflect on the learning experiences offered. The course provides a hands-on (CREATIVE) experience in applied finance. Emphasis will be on building financial modeling and the use of real-world data to evaluate the common financial problems encountered in Corporate Finance and Investment. Students will draw on the theories they have seen in their Finance classes to build their own interactive financial model from “scratch” (no templates) to practice blending accounting, finance, and Excel skills. In other words, students must develop an original response using real economic data. Examples of project topics include, but are not limited to, retirement planning, mortgage planning, portfolio management, option pricing, and the valuation of a publicly traded company. The projects reflect skills and the type of work many will be asked to perform at their workplaces upon graduation. The faculty member will provide mentorship by giving feedback for these projects. A reflective learning opportunity will also be provided to students enrolled in this course. Students will be required to provide peer (student-to-student) review/critique of projects. Each student will provide a written reflection to the instructor based on the critiques of their own project.
Topical Outline
Retirement planning Mortgage re-financing Graphing in Excel Cost of equity Beta WACC Cost of debt Financial forecasting Project cash flows Sales forecasts Inventory management Work scheduling Portfolio optimization Financial ratio analysis Yield curve dynamics Real options Binomial option pricing Project selection methods Repeatable projects Interest rate parity Monte Carlo simulations