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.