Financial modeling is a balancing act...and boy, am I clumsy...
So apparently modeling is an essential part of planning and gauging a firm's financial future. During my time at All Stars, I was luck enough to start becoming familiar with projections, cash flows, and financial reporting dashboards (thanks Vanessa & Jack!). Our Executive Director, Mario Vargas, had to check in with the finance committee monthly to discuss revenue projections (including donations and events), compare previous projections to actual performance, and think through new ways to reenergize our current donor base and open the door for new donors. To help in the process, our accountant made a beautiful, sophisticated dashboard to guide us through the numbers. This is about as far as my financial experience went. I’d never had to plan, build or explain anything.
If I wanted to do venture capital, this needed to change (allegedly). In my MBA1 year, I was committed to really digging into all the opportunities that would expand the skill set I needed. Lucky for me, Stanford GSB has on ongoing partnership with Training the Street and was subsidizing one of their bootcamps on campus. The bootcamp consisted of two, eight-hour WEEKEND days. Whatever, sacrifice, right? Strangely, I actually didn’t mind giving up my weekend to attempt to understand concepts that for the most part were over my head in financially-based conversations.
Training the Street has become “the training standard for finance and professional services firms, business professionals, and undergraduate and graduate students seeking careers in finance. By incorporating a dynamic mix of live instruction, class collaboration, and technical fundamentals, we teach you real-world applications of finance theory in a way that brings finance fundamentals to life.” Seems like a no-brainer to me. Let's do this!
Although 16 hours may seem like tons of time, the particular course I took, "Financial Modeling: How to Build A Complete Model in Excel", move really, really quickly. Lucky for me, I had an amazing instructor, Billy, a former investment banker with Morgan Stanley and Bank of America. He had a great sense of humor, was incredibly encouraging and answered all of my questions. I also think it’s safe to say that I was the living, breathing version of a YIELD sign of the class. Always asking questions, always requesting re-dos, always asking to slooooow dooooown. But hey, I'm way too old to sit in a paid class confused about what's happening...where's the value in that? In the end, we all made it through.
According to the course overview, the completed product is "a dynamic model with 5 years of projections and 3 years of historical data, containing the following detailed statements and schedules":
· Income statement, balance sheet and cash flow statement
· Working capital schedule, depreciation and capital expenditure
· Intangibles amortization schedule
· Shareholders’ equity schedule and share repurchases
· Debt and interest schedule with a “cash sweep”
Additional topics include:
· Understanding and controlling circular references
· Strategies for balancing a model
· Sensitivity analysis to match expected financial performance
· Fundamentals of “what-if analysis” using data tables
· Building a practitioner’s Discounted Cash Flow (DCF) schedule
Ultimately, this course definitely helped me start to think about the logic of how modeling works and what the core pieces of any business's financial decision-making process are. I'm not paid or sponsored by TTS, I just really benefitted from the course!
You can learn more about Training the Street here
You can check out their online course offerings here
Or, you can check out this in-person, public course offerings here
Good luck debugging those models, Friends!