COURSE NUMBER: MBA237.1A
COURSE TITLE: Financial Statement Modeling for Finance
Careers
UNITS OF CREDIT: 1
INSTRUCTOR: Sarah Tasker
E-MAIL ADDRESS: tasker@haas.berkeley.edu
CLASS FORMAT: In-class exercises with some lecture and
discussion. Students are required to bring a laptop computer to every class.
MEETING DAY(S)/TIME: Monday, 2:00-4:00 PM, during Spring A (January 27 – March 17)
PREREQUISITE(S): Mastery of the concepts from Core
Accounting and Core Finance; 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.
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 A 2014 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.)
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.