Introduction to Financial Modeling

This two-day course provides a hands-on introduction to three essential classes of financial models: corporate finance, risk management, and structured finance. You will be introduced to the theory, accounting and technical implementation of each type of model. At the end of the course, you will be able to: Read and understand financial statements; Compute ratio analysis models, and interpret them and their limitations; Create and interpret pro-forma projections; Understand the basic mechanics of discounted cash flow (DCF) valuation methods; Create DCF-based valuation models; Understand the meaning of ''risk'' and ''reward'' in a financial context; Understand the characteristics and limitations of discount-rate risk measures; Understand the basic concepts of probabilistically-measured risk; Create discount-rate risk and probabilistically-measured risk models, and understand their limitations; Understand the basic framework of structured-finance models; Create simple MBS and ABS models, and measure the risks and rewards of these securities.

Target Audience

Anyone who needs a basic understanding of the main financial models in use today. This includes: managers who are exposed to one or more of these model types; workers making a career transition into finance, or into a new area of the finance industry; recent graduates who want to jump start their career growth in the finance industry; and students who are new to finance or modeling.

Learning Objectives

After you complete this module you will be able to:

  • Read and understand financial statements
  • Compute ratio analysis models, and interpret them and their limitations
  • Create and interpret pro-forma projections
  • Understand the basic mechanics of discounted cash flow (DCF) valuation methods
  • Create DCF-based valuation models
  • Understand the meaning of ''risk'' and ''reward'' in a financial context
  • Understand the characteristics and limitations of discount-rate risk measures
  • Understand the basic concepts of probabilistically-measured risk
  • Create discount-rate risk and probabilistically-measured risk models, and understand their limitations
  • Understand the basic framework of structured-finance models
  • Create simple MBS and ABS models, and how to measure the risks and rewards of these securities

Course Syllabus

 

Day 1 - Introduction and Corporate Finance Models

Day 2 – Risk Modeling and Structured Finance Models

Introduction to the Three Kinds of Models

Accounting Basics

  • Introduction to ''the language of finance''
  • Reading financial statements: cash flow statement, balance sheet and income statement

Corporate Finance Models

  • Ratio analysis models -- computing and interpreting
    • Model assumptions and limitations
  • Pro-forma projections -- creating and interpreting
    • Model assumptions and limitations
  • Introduction to discounted cash flows (DCFs)
    • Time value of money and cash flow mechanics
    • Introduction to the DCF valuation method
    • Creating and interpreting DCF-based valuation models
    • Model assumptions and limitations

Risk Models

  • Introduction to ''risk'' and ''reward'' in a financial context
  • Key characteristics and limitations of discount-rate risk measures
  • Creating and comparing discount-rate risk models
  • Understanding key assumptions and model limitations
  • Essential aspects of statistics and probability for financial modeling
  • Basic models of probabilistically-measured risk
  • Creation of probabilistically-measured risk models
  • • Understanding key assumptions and model limitations

Structured Finance Models

  • Introduction to structured finance: lending against cash flows

A Basic Mortgage-Backed Security Model

  • Aggregating the assets
  • Modeling the basic cash flows
  • Modeling prepayments and defaults
  • Measuring risk

A Basic, Generalized Asset-Backed Security Model

  • Considering the included assets
  • Modeling the basic cash flows
  • Modeling prepayments and defaults
  • Measuring risk

SESSIONS AVAILABLE

No sessions currently available. Contact client services to get the next available date.

COURSE INFORMATION

Professional Credits:
CPE Credits 14
Price
$1,449 USD
Duration 2 Days
Advance Preparation
No advance preparation required.
Prerequisites
Attendees must have a solid knowledge of Excel
Instructional Method
Classroom
Level
Basic