COURSE NUMBER: MBA236G.1B

COURSE TITLE: Designing Financial Models that Work

UNITS OF CREDIT: 1

INSTRUCTOR: Sarah Tasker

E-MAIL ADDRESS: tasker@haas.berkeley.edu

MEETING DATES: Fall B only, 10/17 – 11/28

PREREQUISITE(S): Intermediate Excel skills along the lines of what is covered in Essential Workbook Techniques, Power of Calculations, and Data Analysis with Functions at Haas Computing Services.

CLASS FORMAT: In-class exercises with some lecture and discussion. Students are required to bring a laptop computer to every class.

REQUIRED READINGS: None

BASIS FOR FINAL GRADE: In-class exercises, homework, class participation, and a comprehensive quiz at the end of the course

ABSTRACT OF COURSE'S CONTENT AND OBJECTIVES:

If your goal is to learn how to build big, complicated Excel spreadsheets employing sophisticated methodologies, STOP – no need to read further – this isn't the course for you.

 The premise of this course is that spreadsheet financial models are often too big, too complicated, too intimidating, and too hard to follow (and therefore usually too buggy) to be of much help to real people in real world organizations. Instead, people need to be able to play with beautifully clear and elegantly simple representations of the economics of the project/product/deal/organization they're pondering, with the objective being insight and shared understanding. In this course we focus on designing spreadsheet financial models that work because they are small (i.e., fit easily on one or two laptop screens), simple (i.e., involve only basic arithmetic), easy to understand (i.e., a non-MBA can follow the thinking shown with no struggle and no assistance), and fast to build (i.e., in an hour or two, once you get the hang of it.)

We tackle case studies ranging from pricing a professional services consulting engagement to opening a B&B to starting a software company. The actual computations are rarely the challenging part – the challenge is issues like how to get traction on the problem in the first place, how to make simplifying assumptions, how to track down estimates for input variables, and then, having identified a structure and inputs for the model, how to "tell the story" visually and mathematically in the spreadsheet so that the model is likely to be clear and bug-free. We draw on many sources of wisdom in this quest for clarity/accuracy/impact, including the disciplines of information design, software development, and the sociology of model use. And since good design is emergent, requiring feedback and iteration, we spend a significant amount of class time doing "triangulation checks" and "usability testing" during which, in various combinations, we provide feedback about which aspects of a draft model seem confusing or buggy.

This is a great course to take if you either a) are comfortable with Excel but have minimal modeling background and are looking for a non-intimidating way to get started, or b) have significant exposure to financial modeling but are frustrated by how confusing and unhelpful your (or your colleagues') models have been and are looking for ways to improve clarity/accuracy/impact. 

CAREER FIELD: Students going into all fields have found this course helpful

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.