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.