COURSE NUMBER: MBA237.2A

 

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: Tuesdays, 4:00-6:00 PM, Spring A (January 22 – March 12, skipping February 19)

 

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 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.)

 

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.