Business Finance and Financial ModelingYou can learn spreadsheet models, modeling techniques, and common applications for investment analysis, company valuation, forecasting, and many more.
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Financial Modeling is the process of creating a summary of a company's expenses and earnings in the form of a spreadsheet that can be used to calculate the impact of a future event or decision.
Business Finance refers to the management of the funds and credit employed in the business. It is also called Corporate Finance. The usual Business Finance requirements are to purchase assets, goods, raw materials and the other flows of economic activities.
A financial model has many uses for company executives. Financial analysts most often use it to analyze and anticipate how a company's stock performance might be affected by future events or executive decisions. The Business and Financial Modeling online program will allows students to apply their information to the real world. Financial modeling is an in-demand skill. Whether you’re looking to switch careers, angling for a promotion, or have started your own business, you can use financial modeling to forecast future business performance and compare how different factors will affect your revenues.
Financial modeling is a representation in numbers of a Organisation’s operations in the past, present, and the forecasted future. Such models are intended to be used as decision-making tools. Organisation executives might use them to estimate the costs and project the profits of a proposed new project. Financial analysts use them to explain or anticipate the impact of events on a Organisation’s stock, from internal factors, such as a change of strategy or business model to external factors such as a change in economic policy or regulation. Financial models are used to estimate the valuation of an organisation or to compare businesses to their peers in the industry. They also are used in strategic planning to test various scenarios, calculate the cost of new projects, decide on budgets, and allocate corporate resources.
While accounting tracks and organizes your company's financial information, business finance uses this information to help you manage your money and make your operation more profitable. Business finance includes reading financial statements and connecting the dots between your profit and loss, balance sheet and cash flow statements. If these documents point to a shortage of capital, business finance also provides the tools to plan strategies for bridging the gap.
Financial - Indicates that we are working with the company’s financial statements. Modelling - Indicates that we are laying down a company’s financials systematically, connecting these financial statements and subjecting the same to a bunch of equations. The entire thing tied together is called a model, a model with specific input (financial statements) and a specific output (valuations). The end goal of a financial model is to help you build a perspective of valuation. Many a times the output of the financial models is the company’s share price after factoring in everything that matters.
Uplatz’s Business and Financial Modeling course is designed to help you make informed business and financial decisions. These foundational training will introduce you to spreadsheet models, modeling techniques, and common applications for investment analysis, company valuation, forecasting, and many more. When you complete the specialization, you'll be ready to use your own data to describe realities, build scenarios, and predict performance.
Course/Topic - Business Finance and Financial Modeling - all lectures
We will learn Business Finance in 3 parts. In this first part of Business Finance we will see what is Business Finance and what is the meaning, nature and significance of Business Finance. Furthermore, we will learn why Business Finance is required to carry out various activities.
In this video we will cover the second part of Business Finance. We will learn about the classification of sources of finance and how we can get funds from the various sources. We will also learn about the characteristics of these sources.
In this video we will learn about the third part of Business Finance. In this video we will discuss International Financing. We will learn about the various avenues of an organization to get a finance, how to obtain finance and how to raise a finance, internationally.
In this video tutorial we will cover the first part of Financial Modelling. We will learn what is Financial Modelling and its use. Furthermore, we will also learn how to prepare financial model and the different types of Financial Models.
In this video we will cover part 2 of the Financial Modelling. In this video we will discuss of the different types of Financial Models in detail. How to use these models as per the Business? We will also see a list of 10 common Financial Models.
In this video we will see the final and last part of Financial Modelling. In this video course we will discuss all other Financial Models which are important and used by all other Financial organizations. These Financial Models are prepared by the organization on the basis of their business. Eg. IPO model , LBO model, IRR model.
After successful completion of this course you will be able to:
• Forecast and predict future business needs
• Raise debt and/or equity
• Identify financial risks and/or corporate development opportunities
• Analyze the quality of earnings and investments
• Determine the value of businesses
• Analyze mergers and acquisitions
• Raise capital
• Construct and examine the characteristics of distributions of returns
• Calculate the variance co-variance matrix and use it to select optional portfolios
• Test for market efficiency using simple tests
• Develop, construct and run an event study analysis of the abnormal returns
• Estimate betas and calculate a firm's cost of capital
• Calculate the value of an option using Black Scholes and the binomial model
• Use and develop spreadsheet based solutions to financial problems
Financial Accounting & Reporting - Course Syllabus
1) Introduction to Financial Accounting and its importance
2) Introduction to Financial Reporting and its importance
3) Golden rule of accounting
4) Recording of transactions
5) Trial balance
6) Bank reconciliation statement
7) Bill of exchange
9) Rectification of errors
10) Provisions and reserve
11) Divisible profit & dividend
12) Financial statements of companies
13) Income recognition, classification of assets and provisions
14) Insurance claims
15) Internal reconstruction
16) Managerial remuneration
17) Accounting for not-for-profit organization
18) Accounting for bonus issue and right issue part
19) Accounting for share capital
20) Accounting ratios
21) Amalgamation of companies
22) Banking companies
23) Accounting for branches including foreign branches
24) Buy-back of securities and equity shares with differential rights
25) Cash flow statement
26) Consolidated financial statements
27) Corporate social responsibility
28) Departmental accounts
29) Accounting for employee stock option plans
30) Framework for preparation and presentation of financial statements
31) Hire purchase and installment sale transactions
32) Incomplete records
33) Insurance claims
34) Issue of debentures
35) Liquidation of companies
36) Non-banking financial companies
37) Accounting for partnership basic concepts
38) Dissolution of partnership firm
39) Reconstitution of a partnership firm – admission of a partner
40) Reconstitution of a partnership firm – retirement death of a partner
41) Preparation of financial statement of bank
42) Profit or loss pre and post incorporation
43) Redemption of debenture
44) Redemption of preference shares
45) Special transactions of bank
TheBusiness Finance and Financial ModelingCertification ensures you know planning, production and measurement techniques needed to stand out from the competition.
Wharton's Business and Financial Modeling Specialization is designed to help you make informed business and financial decisions. These foundational courses will introduce you to spreadsheet models, modeling techniques, and common applications for investment analysis, company valuation, forecasting, and more.
Financial modeling is the core skills required for profiles like Investment Banking, Equity Research, Portfolio Management, Project Finance, Credit Research, Financial Planning & Analysis etc. You can acquire the skills to get into these profiles or be a successful investor or help your start-up raise funds.
Financial modeling skill is a high demand in contemporary scenarios where businesses rely on data science to create financial models and predict future trends. It has a lot of scope in a variety of finance and related segments and is very different from the traditional accounting and audit jobs.
Uplatz online training guarantees the participants to successfully go through the Business Finance and Financial Modeling Certification provided by Uplatz. Uplatz provides appropriate teaching and expertise training to equip the participants for implementing the learnt concepts in an organization.
Course Completion Certificate will be awarded by Uplatz upon successful completion of the Business Finance and Financial Modeling Online course.
The Business Finance and Financial Modeling draws an average salary of $100.952 per year depending on their knowledge and hands-on experience. The Business Finance and Financial Modeling Admin job roles are in high demand and make a rewarding career.
While experience counts for challenging job profiles, financial modeling is becoming more and more open to new incumbents. If the skill is well learnt and practiced, there is no reason why a fresher cannot be considered for key roles in Financial Analysis.
It is difficult to understand the nature of relationships between various financial variables which finally culminate in the financial statements. However, financial modeling is considered to be one of the most complex tasks, even in the financial field. There are several reasons behind this assumed complexity.
Note that salaries are generally higher at large companies rather than small ones. Your salary will also differ based on the market you work in.
Business Intelligence/ Business Analyst.
Business Intelligence Analyst.
Senior Quantitative Analytics Specialist.
1. What is Financial Modeling and the Use of Financial Modeling?
This would be the first and important question during a financial analyst or other related interviews.
Financial modeling is a mathematical representation of a future financial statement in the form of a spreadsheet, which explains the plans for future revenue and expenses. This is a textbook explanation of financial modeling, but the interviewer wants you to explain financial modeling in your understanding.
Whenever we need to make any financial decisions of any company, we have to check future projections in the form of financial statements, and on the basis of these financial statements we need to decide if that would be a wise decision. So, preparing those financial projections sheets, we need to learn financial modeling tools. The three main financial statements that need to be prepared would be the Income statement, Balance Sheet, and Cash Flow.
2. What are the Steps for Preparing Financial Modeling?
Financial modeling is a vast subject to explain as different projects or investment needs a different kind of strategy to follow and build the best financial model. It depends on person to person or project to project as the requirement or result from any financial model is different. But there are some steps to follow to build a financial model which are as follows.
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Collect information for the project.
Prepare an assumption sheet for all information.
Design a template that is easily understandable by all stakeholders.
Interlink all related financial statements.
Test all links and formulas.
Prepare results summary and documents.
3. What are the Various Techniques of Company Valuation? Explain Briefly
This would be an important question during your financial modeling interview session as this is an important role of any financial analyst in his career.
There are three types of techniques or method of determining of valuation of any company which is as follows:
DCF (Discounted Cash flow) Method: DCF (Discounted Cash Flow) is one of the methods to calculate the firm’s value by determining the present value of future cash flow.
Market Value Business Valuation Method: This method of valuation determines a firm, asset, or any other kind of security value by the selling value of similar items in the market.
Asset Approach: In this type of valuation method, the firm’s net value would be determined by the net value of present assets in the company.
4. What is the Difference between Debt Financing and Equity Financing? Which is more Expensive?
At the time of raising funds, companies do have two option of raising funds, Debt Financing or Equity Financing. Both options have their own advantages and disadvantages.
Debt Financing: In this form, companies raise funds in the form of a loan which comes with an interest portion with it. The company would have a monthly obligation to repay it. The main advantage of debt financing is that in this form there is no control of the lender in the business and at the time of full repayment, the relationship between company and lender ends. But the main disadvantages of debt financing are there would be a limit of raising funds that are equal to security collateralized with the financier.
Equity Financing: In this form, the company may raise more amount of funding as compared to debt financing. The financier would acquire some of the ownership of the company and provide funds as per the working capital requirement. There is no monthly obligation of repayment of funds and no interest portion would be added to the principal amount. But that doesn’t mean that there are no disadvantages with Equity funding. As the financier would have full control in the company, so the company has to share the profit margin with investors and for any decision making for the company, we have to consult with the investors.
As per the differences between these two, equity financing is more expensive than debt financing. Debt financing would have only interest portion in repayment, but in the form of equity financing, the company would have to share profits and at the time of exit, the investor will be first parties to take back the money at the ownership percentage they hold in the company.
5. What is DCF?
DCF (Discounted Cash Flow) is the best valuation method to calculate the value of the firm at the time of acquisition or financing. In DCF, the net present value would be calculated for future cash flows. For DCF, financial analyst, first prepare forecasted financial statements such as Balance Sheet, Income Statement and Cashflow. To calculate the valuation of a firm on the basis of DCF, we will use the below formula,
DCF = CF1/ (1+r)1 + CF2/ (1+r)2 + CF3/ (1+r)3 …..+ CFn/ (1+r)n
CF1, CF2, CF3 or CFn = Cash flow for future periods.
r= the discount rate.
n=no. of years.
6. What are the Different kinds of Financial Statements? Explain Briefly
There are 3 kinds of financial statements which have to be prepared by any firm for any financial year, which are as follows.
1. Balance Sheet: A Balance sheet is the summary of the financial situation of a business which shows the actual position of assets, liabilities, cash, or bank balance at a particular period of time. It also shows the total no. of debt and actual equity position of the company.
2. Income Statement: An income statement that also refers to a Profit and loss account is one of the main kinds of financial statements of the company which shows the revenue, expenses, and net profit (or loss) of the company at a particular period of time.
3. Cash Flow: Cash flow is another kind of financial statement which shows the flow of cash in the company for a particular period of time.
7. Explain Different kinds of Financial Ratios?
Financial ratios are a key indicator of the financial health of any company. These ratios are the relationship between two numerical values derived from the financial statement to understand the financial health of the company. There are 5 kinds of financial ratios explained as follows:
Market Valuation Ratios
8. What do you Understand from Working Capital?
Working capital refers to the money available with any business for day to day operations. Working capital could be calculated from the below formula.
Working capital = Current Assets – Current Liabilities
9. What is NPV and IRR? Explain How do you Calculate them?
NPV and IRR are different kinds of methods to calculate the internal rate of returns which are useful for analyzing and comparing two or more projects for investment purposes. These concepts are very important in financial modeling. Below are the basic details and formulas to calculate each method.
NPV (Net Present Value): NPV (Net Present Value) as the name suggests, is used to calculate the present value of all cash flows generated from a project, cash flows could be negative or positive. It is basically the difference between the present value of cash inflow and cash outflow for any project.
NPV = [ Cash Inflow/ (1+r) t] – Cash Outflow
r= Discount Rate
t= no. of periods
IRR (Internal Rate of Return): IRR is one of the best methods and widely used in investing projects. IRR is the rate of return at which the NPV of all cash inflow or cash outflow of any project become zero (0).
Each firm has its own pre-decided required rate of return from any project. If IRR is higher than the required rate of return, that project should be accepted otherwise it should be rejected.
We can calculate IRR from the below formula,
IRR = 0 = CF0 + CF1/ (1+IRR) +CF2/ (1+IRR)2 +… CFn / (1+IRR)n
CF0 = Cash outflow or Initial investment
CF1, CF2 and CFn = Cash inflow
n = time period
10. What are the Different Sections in the Profit and Loss Account?
Profit & loss account is a financial statement that shows the total no. of sales, expenses (fixed or variables), and net profit (loss) in the company for a particular period of time. There are 3 main sections in a profit & loss account, which are as below.
Income or Revenue section: In this section, total revenue (income from main business activities and other incomes) would be included and gross profit will be calculated.
Overhead section: In this section, all kinds of overheads or expenses would be included.
Profit or Loss section: At this level in the profit & loss account, the net profit (or loss) would be calculated.
11. Suppose there is Excess Cash in our Balance Sheet, what would you Suggest for using it in Proper Ways?
Many times, the interviewer asks these kinds of questions, they want to check your practical awareness as well.
If there is excess cash in the balance sheet, first we should check other line items in the balance sheet, according to other balances, we should suggest using cash in proper ways, some of the ways could be as below.
We can use excess cash for investing in modern machinery or equipment, which could be further useful in increasing revenue for the company.
We could save on interest charges by paying long term liabilities in case we have excess cash in the balance sheet.
We can use some part of excess cash for rewarding its shareholders in the form of dividends.
Other uses of excess cash could be investing in other new business ventures or investing in other listed stocks.
12. What do you Understand from WACC? How would you Calculate it?
WACC (Weighted Average Cost of Capital) is an average rate of return which the company is expected to pay to its debt or equity investors. It is the average cost of capital which includes debt and equity both.
The formula for calculating the WACC of any firm is as follows:
WACC = [(E/V *Re) + (D/V*Rd*(1-Tc)]
E = Market Value of Total Equity
D = Market Value of Total Debt
V = E+D
Re= Cost of Equity
Rd= Cost of Debt
Tc= Corporate Tax Rate
13. How would a Company’s Financial Statement be Affected by the Increase in Debt in the Company?
A financial analyst should be aware of the effects of the changes in debt or equity for a company. There would be some questions about these formats during the interview.
When a company increases debt, it would affect the balance sheet and cash flow both. In the balance sheet, long-term or short-term debt line item would increase by the same amount of raised debt. It will increase cash in cash flow under the financing section.
14. What are Cash Flow and its Various Sections?
Cash flow is a financial statement that explains the flow of money in a business. The cash flow statement describes how much money has been transferred to/from the company during a particular period of time. It also shows the cash balance at the end of the period.
There are three main sections/heads in a cash flow statement as per below:
Cash from Operating Activities
Cash from Investment Activities
Cash from Financing Activities.
15. What is Deferred Tax Liability and Why is it Created?
Deferred tax liability is an obligation of payment in the future which is the difference between the amount of tax calculated according to income tax laws and the amount calculated according to financial statements if calculated on an accrual basis.
We prepare financial statements on the basis of accounting standards, but these accounting standards would differ from the rules assigned from Income tax authorities.