Financial Forecasting, Modeling, and Risk Management Course

Explore how profitability, cash flow, and net worth define business health, and learn to read balance sheets, income statements, and cash flow statements for forecasting and strategic decisions.

Learn how financial forecasting powers strategic planning by linking future cash flows to enterprise value, guiding long-term goals, scenario planning, and KPI-driven decision making with practical Excel templates.

Apply web research to analyze the automobile sector, assess emerging market growth, regulation-driven cost increases, and their impact on ABC's forecasting, profitability, and capital expenditure.

Explore ABC’s income statement by tracing revenue, cost of sales, gross profit, SG&A, EBIT, taxes, and net income, including non-controlling interests and the bottom line.

Define clear forecasting objectives to build modular forecasts in excel that connect balance sheet, income statement, and cash flow. Drive senior management decisions through ratio, trend analyses and monthly updates.

Identify the data required to forecast 2020 financials for three companies and set up a 12-month rolling forecast using five years of historical data and the latest monthly data.

Identify key drivers with a driver-based model, starting from discovery and cross-department collaboration. Build flexible formulas around revenue, price, volume, and external market drivers to forecast outcomes.

Identify key drivers for forecasting using driver-based analysis on ABC's statements; forecast net sales by geography and segment with historical growth rates, and project costs via margins and turnover ratios.

Explore the forecasting approach to build the income statement and supporting schedules, then forecast cash flow and balance sheet using historical sales, external factors, and seasonality.

Explore revenue projection methods in Excel, such as sales growth, inflationary volume effects, unit volume, market size, and installed base approaches.

Apply vertical analysis to forecast all ABC income statement lines, using historical margins to project cost of sales, SG&A, taxes, interest, and net income margins for future years.

Forecast expenses and income statements in Excel using vertical analysis and line-item margins to project gross profit, EBIT, taxes, and net income from 2021 to 2025.

Forecast ABC's working capital by linking current assets and current liabilities, calculating net working capital and its change, and projecting accounts receivable and inventories using historical ratios.

Forecast depreciation in Excel using CapEx data with straight-line method and mid-year convention, applying 40-year life for building improvements and 15-year life for machinery to update ending net PPE.

Forecast intangible assets by linking net sales to additions and amortization, estimate ending net intangibles, and set zero goodwill for future years.

Forecast shareholders' equity by building the equity schedule to project ending equity, dividends, share repurchases, and option proceeds, from 2021 to 2025, using earnings per share and share counts.

Finalize the debt schedule in excel, computing ending balances, current portions, and repayments, while applying a revolving credit facility to fund operations and maintain a $750 million minimum cash balance.

Forecast a cash flow statement from 2021 to 2025, linking net income with depreciation and amortization, applying cash flow sign convention and calculating working capital to CFO, CFI, and CFF.

Explore rolling forecasts and variance analysis to continuously refresh budgets using quarter-end updates, compare actuals against budgets and prior year, and improve forecast accuracy for financial planning.

Learn ratio analysis techniques, including vertical balance sheet analysis and horizontal income statement analysis. Forecasted outcomes reveal how assets, debt, and profitability evolve over time.

Calculate the average receivables collection period, inventory processing period, and average payable days by dividing 365 by the respective turnover ratios for each year, starting with 2017.

Learn to incorporate profitability and risk into financial forecasting using base, best, and worst case scenarios. Analyze how scenario analysis informs forecast ranges, probabilities, and solvency.

Explore future trends in forecasting, including instant scenario management, rolling forecasts, insights-driven planning, and the shift to standardized automation, cloud analytics, and self-service reporting.

Conclude the course by summarizing core financial forecasting topics, rolling forecasts, ratio analysis, and shareholder's equity, while noting areas not covered such as qualitative methods and intangibles.

Define risk as the blend of future unpredictability and outcome value, guiding risk management to balance downside and upside for profits. Learn through Burger King and Microsoft examples.

Explore how uncertainty and randomness complicate risk assessment and why heuristics and cognitive biases mislead forecasts. Learn from BlackBerry, Kodak, and a Linda example to see why adaptation matters.

Explore probability basics from uncertainty and randomness to binomial distributions and Bernoulli tests, using series of games to quantify risk and inform financial decision making.

Explore how randomness and luck shape finance, revealing why overconfidence and illusion of control can mislead risk management, and how to manage luck rather than control it.

Define risk management and risk measurement, and show how managing risk at all levels maximizes the company's finances by measuring, adjusting, and hedging risk.

Develop a custom risk management framework that integrates risk and return, anchored in governance, risk identification and measurement, infrastructure, policies and processes, monitoring, mitigation, communications, and strategic analysis.

Define risk tolerance as how much loss or opportunity cost a company will accept, guiding governance and enterprise risk management to set risk appetite and hedge against key risk drivers.

Identify and implement risk budgeting by assessing line items, comparing risk tolerance levels, gathering input from key staff, and applying mitigation and contingency plans to align risk with organizational goals.

Assess how risk tolerance and risk budgeting shape corporate outcomes using real-world failures and governance gaps. Identify how weak controls and front/back offices' autonomy shape risk appetite via risk measures.

Navigate uncertainty and manage risk by balancing control and opportunity management, blending quantitative tools with judgment to make strategic decisions that align with the organization's risk appetite and objectives.

Align owner and manager incentives through pay and incentive plans to manage risk, address the principal-agent problem, and use monitoring to ensure decisions reflect owner preferences.

Examine how people and process management failures and board oversight contributed to Lehman Brothers' collapse, highlighting the principal-agent problem, risk-management missteps, and governance gaps.

Adopt a business-first mindset to map critical assets and crown jewels, and coordinate cybersecurity risk management across information technology subdisciplines and the three lines of defense.

Integrate technology risk with enterprise risk management to align IT and operational risk, define risk appetite, and strengthen resilience, including three lines of defense, vendor governance, and disaster recovery planning.

Analyze how Pluto mitigated cyber threats through risk management, incident response, and employee awareness, illustrating CIA triad impacts on confidentiality, integrity, and availability during multiple breaches.

Understand how board governance, senior management, and risk committees shape risk management and reporting in a large publicly traded firm, with roles for cro, finance, and audit.

Develop a flexible risk management culture using quantitative techniques to detect and respond to crises across market, credit, operational, and liquidity risks, balancing risk and return.

Examine how General Motors' ignition switch crisis reveals failures in organizational structure and risk management, including lacking risk ownership, silos, and weak risk monitoring.

Explore idiosyncratic and systematic risks, differentiate microeconomic and macroeconomic factors, and reduce them through diversification, hedging, and asset allocation across fixed income, cash, and real estate.

Define financial risk and its major types, including credit, default, liquidity, market, currency, and asset backed risk. Explore risk assessment tools like regression analysis, value at risk, and scenario analysis.

Explore how risk taking by private equity fueled growth while risk making by investors led to Toys R Us debt, bankruptcy, and losses for employees, suppliers, and customers.

Examine foreign exchange risk and hot money dynamics during the Asian financial crisis, analyze IMF bailouts, and learn hedging with foreign exchange reserves for risk management.

Interest rate risk links bond values to rate moves; prices fall when rates rise, with longer maturities showing greater sensitivities, while diversification or hedging with derivatives can reduce this risk.

Explore operational risk, its causes from people, processes, and technology, and practical risk management steps, indicators, and governance to prevent losses and protect operations.