[Music] well the summer is over the August exams are done we're getting into September and many of you are probably thinking about your CFA journey and what's next for you some of you are registered for November some of you are thinking about 2025 so I want to introduce to you something that will be appearing on Mark mm. com beginning September 9th the financial modeling module begins it's going to run 12 to 16 weeks uh this is for any uh body who has the applied level or who on Mark mom. com has subscribed to the CFA plus option the plus option gives you the applied level we will be uh modeling cost scope and Canadian apartment reats we'll be modeling uh two different companies this is a US Gap company this is an IFRS company so we'll apply some of the things we learned in the CFA curriculum to these two companies um we're going to start from basically a blank uh worksheet and a 10K so we're going to start by determining what data sources we need and we're going to set up Excel before you begin any kind of modeling you have to set up your spreadsheet uh the layout that we need getting the historical data in there and throughout the course we'll be introducing some very Advanced Excel techniques some apis uh that are available so that you can import a whole bunch of historical data I am not an Excel expert so I have gotten another Charter holder who has lots of experience with modeling and Excel uh to demonstrate how to get those Advanced Techniques done uh we're going to do a thre statement model the first pass for financial modeling is just modeling the company the second pass what we'll do after this 12 or 16 12 to 16 weeks are over is we'll look at how do we begin to Value this company what are the valuation tools that we begin to use that is the second part of this you can think of that as a like a second semester uh onto this one uh uh we're going to focus on uh the three statement model and all the schedules building the Revenue schedule expenses a debt schedule if there are leases we'll model that taxes working capital depreciation and amortization uh Which models our PPE and our capex all at the same time our Equity uh and some data validation techniques uh this is the financial analysis aspect of it there are two parts to financial modeling number one is you got to understand the company you got to understand the drivers of every line item on the balance sheet and on the income statement and you have to figure out what relationship it has to other things uh what drives Revenue what drives expenses and you have to think about those going forward how do you think those are going to unfold once you have all of that you got to put them in Excel I'm going to show you how to use the functional approach to Excel for any of you who have any computer science background at all you'll understand functional programming you have a computer program that runs it does nothing it calculates nothing it modifies nothing every time something needs to be done it's a function call same thing with modeling your balance sheet the income statement and the cash flow statement should calculate absolutely nothing every line item in your forecast every cell should be a call to some schedule somewhere so I'll show you how to set up uh the functional approach if you do this right um and you balance when you build your model when you change assumptions you should always balance always uh we'll cover common commands that are used uh look at Best Practices for building a uh financial model best practices for the industry when I talk about that and advanced Excel uh techniques as well here we're going to rely on new voices uh to get this done for you because while I'm an expert over here uh I'm pretty good at at Excel I am not an Excel expert you got to bring people in for that okay I'm going to make two promises to you about the uh Financial modeling module uh promise number one uh it is going to be more comprehensive versus other sources uh that is cfai I've looked at three other sources CF and then um there are two companies that start with Wall Street that do Financial mod modeling I'm sure you can Google them and figure out which ones they are uh I've been through all of them uh I've seen the practical skills module uh at level one uh for uh that's offered uh with cfai uh I had seen it before uh so when I started watching I go this is familiar um this person who's doing it I'm going to try not to say too many names here the person that's doing it um if you're familiar with the person's name go to YouTube and Google that person and you'll see that they've been uh giving the same presentation for at least the last at least the last eight years uh it goes back to 2016 there's a uh video online for CFA Nigeria another one for CFA New Zealand the same company uh the same data and it's manufactured data um not saying that it's not worth going through it's very basic it's very very basic I can guarantee you we are way more comprehensive than that because Point number one we are not using manufactured data I am throwing you into the messiness of the real world right away uh for the Wall Street companies the two of them that are out there Wall Street something and Wall Street something else one of them is not good at all the other one is pretty good uh but has a lot of simplifying uh simplifying steps in there I think they could be more rigorous than what they are but I think they focus more on quantity and and scope trying to have as as many models covered as possible so they don't really dive a mile deep on uh on any uh on any model which is exactly what we're going to do uh so we're never going to come across manufactured data uh it is as messy as the real world because it is the real world no simple growth rate assumptions I have seen that used in both of these companies uh where uh revenue on this year revenue on this year calculate a growth rate forecast that going forward no that is useless it is uninformative and it's not very useful at all for anything uh so we are not going to use any of that we will I shouldn't say we're never we will as our first pass use a simple growth rate then we're going to do it right and then we're going to compare what we got with the growth rate and we're going to see how much more you know now versus the growth rate and how much more you useful it is and how much better it's going to be so uh we will avoid these simplifying uh steps a far heavier focus on the financial analysis aspect uh when you are taking these Financial modeling courses it is heavy on Excel uh but it's light on the inputs it is here's how you set it up in Excel here's how you model this here's how you build this schedule here's how you build that schedule but the uh I if you don't have the right uh thinking going in about how would you model for example Costco how would you model membership Revenue how would you model merchandise Revenue keep in mind they keep opening stores so you have a comparable and you have a growth rate uh on top of that how would you begin to think about modeling that and things in the real world can get really complicated really fast that's the wrong approach we have to find the Simplicity making something simple is hard making something complicated that's easy but then it's hard to maintain after so we're going to look for the Elegance in this so we're going to have a far heavier focus on financial analysis in other words we're going to start from the 10K and a blank Excel worksheet and we're going to as if I were sitting right beside you and you're saying okay well what do I do first here's where we go let's go to this section let's read this let's make our notes let's think about how this what they're saying in here and how we would begin to model this if we had to I'm going to bring you to an Institutional level ability I say about 80% of the way there simply because we're not going to have access to certain resources that you would at an Institutional level we are not going to have access to management so there is a point where we'll say we can't model it any better than this even though we see a pathway to model something better we simp simply don't have the data we would have to ask management some questions and we just don't have access to management if we're looking at a mining company for example its revenues most mining companies are price takers its revenues are dependent upon uh commodity prices we're probably not going to have a very good forward curve of prices uh that we can then uh per quarter by quarter base our pricing off the forward curve we're not going to have that kind of information cuz we don't have a commodity Department that's going to give that to us I'll get you 80% of the way there promise number two no other CFA provider does or can provide this we are the only ones with the applied level I know that because I created it we're the only ones who probably can do something along the lines of the applied level because mark.
com is the only one that actually has a practitioner that is doing this I am active in markets all the time time I don't see uh any anybody from any of the other providers that are active in markets you can go to my YouTube channel you can review the last two years of Market outlooks if you want to know if I know what I'm talking about you can go to Kaplan you can go to any of the other providers and you can look for their Market outlooks and oh oh you're not going to find any because they don't do it because they don't have practitioners uh so no other provider can or will provide this for you not not real world stuff well they may introduce a financial modeling uh um module at some point in response to what we're doing but they will be using manufactured data I strongly doubt they have the skill set to attack the real world CFA designation does give you a competitive Advantage indicating Mark mom. com uh and or applied level with your level one level two level three stand standing uh in job interviews does matter showing up with a financial model you built will make a difference you're sitting in a job interview for financial analyst rather than them trying to figure out if you know what you're talking about you open up your laptop you spin it around you say I've done this I've completed the financial modeling module on Mark m.
