Introduction to Financial Modeling
- Familiarity with excel
This course will teach you how to use two years of historical income statement data and two years of historical balance sheet data to build a fully integrated financial statement model. It is designed for those new to financial models.
Section 1 will introduce the accounting equation and the three primary financial statements in the context of building a financial model. The content starts with the accounting equation, which is the single most important concept in accounting. The remaining three videos introduce the financial statements one at a time with a focus on the relationships that are important as you build financial models.
All of the material is provided via video-driven instruction with notes in pdf format to help follow along.
Section 2 will walk through integrating the three primary financial statements and creating a five-year projection. The first video provides a quick overview of the process. It is an easier process to grasp if thought of as a series of steps. It will also make it easier to measure progress as you work through the longer video. The video in Lecture 2 will walk you through the process of building the model cell by cell.
Because you are walking through the entire process of building a model, the video in Lecture 2 runs long: 35 minutes total. My advice would be to download the excel template attached to this lecture and build the model as the video progresses. Building the model yourself is the best way to fully understand the process.
In my opinion, if you want to build a strong financial modeling skill set, a thorough understanding of how an integrated financial statement model works is one of the most important things you can learn.
The last video in this section will explain circular references and how to fix broken models. It can be incredibly frustrating to finish a model and realize that it does not "balance." This video will help avoid that frustration.
I hope the content is useful to you! Please feel free to email me (peter@ASimpleModel.com) with any feedback.
Note: The longer video has some white noise in the background that I am having edited out. I hope to have a cleaner audio file up soon. Thanks for your patience!
- Investment banking analysts
- Introductory Video02:31
- The Accounting Equation07:59
- Balance Sheet07:59
- Income Statement08:32
- Cash Flow Statement06:27
- Overview of the Process04:29
- Building the Model35:04
- Broken Models & Circular References04:47
Investment professional with 8 years of private equity experience and ~4 years of banking experience. Actively engaged as a member of the board of directors for several portfolio holdings. Founded an educational platform (ASimpleModel) in 2013 with the objective of making financial modeling instruction simple and affordable.
Previously Vice President at a private equity firm. Worked for Rabobank International's Mergers & Acquisitions group in New York, and for JPMorgan in South America.
Peter received his B.A. in economics from the University of Pennsylvania.