COURSE NUMBER:
EWMBA 237-13
COURSE TITLE: Financial Statement Modeling for Finance Careers
UNITS OF CREDIT: 1 Unit
INSTRUCTOR: Sarah Tasker
E-MAIL ADDRESS: tasker@haas.berkeley.edu
CLASS WEB PAGE
LOCATION (HTTP URL):
MEETING DAY(S)/TIME: Sundays 2/24 & 3/3, 9:00AM-5:00PM
PREREQUISITE(S): Mastery of the concepts from Core Accounting and Core Finance, Basic Excel
skills
CLASS FORMAT: In-class exercises with some lecture and discussion
REQUIRED READINGS: None
BASIS FOR FINAL GRADE: In-class exercises, homework, quiz, class
participation
ABSTRACT OF COURSE'S
CONTENT AND OBJECTIVES:
According to Wikipedia, "Financial Modeling" is one of those terms
that means very different things to different people.
For financial analysts and investment bankers, "Financial Modeling"
typically refers to taking historical financial statements for a particular
company, projecting those statements two to five years into the future, and
using the resulting projections for valuation and insight into the potential
for transactions such as a strategic merger, an initial public offering, a
leveraged recapitalization, or a leveraged buyout. At Haas we call this skill
set "Financial Statement Modeling for Finance Careers" (FSMFC) to
distinguish it from other forms of financial modeling.
The skills and knowledge taught in FSMFC are essential preparation for careers
in financial analysis or investment banking. In addition, past students not
pursuing these career paths have found the course very helpful for cementing
their understanding of the material in other accounting and finance courses by
seeing how this material is used every day on Wall Street.
In Spring 2013 we will build an entire "three statement" (Income Statement,
Balance Sheet, Statement of Cash Flows) projection model for Papa John's (the
pizza company), experiment with alternative approaches to "plugging"
the balance sheet to implement alternate financing policies, build a fixed
asset schedule to model property, plant & equipment, and then around this
set of projections perform a discounted cash flow valuation, a leveraged buyout
analysis, and a back-of-an-envelope merger consequences analysis. We will also
briefly study the modeling Wall Street analysts published in connection with
the recent initial public offering of The Fresh Market (an East Coast grocery
store), as well as for relative valuation of the publicly-traded bonds of
Nordstrom's, the department store.
Given the one unit nature of this course, our coverage of the FSMFC skill set
will be incomplete, and therefore students pursuing careers in financial
analysis and banking will definitely also want to sign up for the supplemental
workshops offered through Haas Career Services by Training the Street.
Note for students who have taken "Designing Financial Models that
Work": FSMFC and DFMW are very different courses, and completely
complementary. FSMFC has zero coverage of spreadsheet design issues, and
requires complete mastery of the financial accounting concepts covered in the
core accounting course (e.g., the difference between accumulated depreciation
and depreciation expense, or how to put together a SCF from an I/S and B/S,
etc.)
Students are required to bring alaptop (not a netbook) running Excel 2007, Excel 2010, or Excel 2011 (for Mac) to every class session.
BIOGRAPHICAL SKETCH:
Sarah Tasker cares deeply about alleviating perplexity, especially when it
comes to financial modeling. She has spent the last decade teaching modeling to
Haas students, Cornell students, and many new investment banking hires. She won
the Apple Teaching Award at Cornell and the Cheit
Award for Excellence in Teaching at Haas. Her undergraduate and doctoral
degrees are both from MIT.