Introduction

to Financial
Modelling
Training course outline

Overview
This course aims to provide participants with a thorough
mf\]jklYf\af_g^`golgZmad\YjgZmklfYf[aYdeg\]d
^jgeklYjllgfak`&;Yd[mdYlagfk[gn]jj]n]fm]k$
operating and maintenance costs, capital expenditure,
\]hj][aYlagf$\]ZlYf\]imalqfYf[af_Yf\lYpYlagf$
d]Y\af_lgl`]Zmad\%mhg^afl]_jYl]\fYf[aYdklYl]e]flk
for the entity in question. The model is dynamic in
nature, with the ability to run different scenarios and
adjust the timing of key events.
During the course, participants also gain an insight into
how to tailor the outputs of the model to end users,
interpret the results and run sensitivities, as well as
perform some degree of testing to reduce the incidence
of modelling errors.

The course utilises tried and tested modelling

approaches adopted by EY practitioners worldwide.
The techniques covered aim to produce models that are
]paZd]$jgZmkl$ljYfkhYj]flYf\mk]%^ja]f\dqaffYlmj]&
Duration:two days
Pre-course work:none required
Class size: the recommended class size is a maximum
g^)*hYjla[ahYflk&L`akakkgl`Yl]Y[`hYjla[ahYfl[Yf
gZlYafkm^[a]flgf]%gf%gf]Yll]flagfYf\kmhhgjl^jge
the course instructor.

Introduction to Financial Modelling Training course outline

Format

Target audience

The course is highly interactive, comprising of a mix of theory,

group discussions, instructor-led demonstrations and Excel-based
exercises for participants to undertake.

The course is ideal for those looking to achieve the following:

HYjla[ahYflkYj]hjgna\]\oal`Y[gehj]`]fkan]kda\]hY[c$Yf
illustrations booklet covering key Excel formulae, instructions to
eg\]ddaf_]p]j[ak]kYf\]p]j[ak]kgdmlagfd]k&L`]k]oaddZ]mk]\
during the course and will serve as valuable reference material
following the course should participants wish to refresh their
kcaddkYlYdYl]j\Yl]&9\\alagfYd`ge]ogjc]p]j[ak]k[YfYdkgZ]
provided upon request.

C]qgZb][lan]k
The course is designed to cover the following key objectives:
9hhj][aYl]l`]\a^^]j]f[]Z]lo]]fo`YleYc]kY_gg\eg\]d
and a bad one
>gddgoYdg_a[Yd$kljm[lmj]\Yf\\ak[ahdaf]\YhhjgY[`lgoYj\k
model building
:mad\Yeg\]d gjka_fa[YflhYjlkg^gf]!^jgeklYjllgfak`

J]^j]k`l`]ajfYf[aYdeg\]ddaf_kcaddk
?YafYfmf\]jklYf\af_g^d]Y\af_YhhjgY[`]klgoYj\kfYf[aYd
modelling, in order to build models that are robust and
userfriendly in nature
:]YZd]lgmk]]paklaf_eg\]dkegj][geh]l]fldq$afl]jhj]l
the results and have greater comfort over the integrity and
accuracy of the models calculations

Hj]j]imakal]k
Some prior knowledge and experience is assumed. For example,
participants should have:
The ability to navigate easily around Excels menu options
Ogjcaf_cfgod]\_]g^fYf[aYdklYl]e]flkYf\jm\ae]flYjq
accounting
9ZYka[mf\]jklYf\af_g^d]Y\af_YhhjgY[`]klgoYj\kfYf[aYd
modelling

D]Yjf`golgljYfkdYl]c]qfYf[aYdYf\[gee]j[aYdYkh][lk
into Excel
Mf\]jklYf\Z]ll]j`golglYadgjl`]gmlhmlkg^l`]eg\]d
towards end users and interpret the results
Aehjgn]cfgod]\_]g^=p[]d^mf[lagfYdalq
D]YjfoYqklgj]\m[]l`]af[a\]f[]g^eg\]ddaf_]jjgjk

Introduction to Financial Modelling Training course outline

Training modules
Foundations
Modelling basics
O`YlfYf[aYdeg\]dk\gYf\l`]jakckYkkg[aYl]\oal`
fYf[aYdeg\]ddaf_
D]Y\af_YhhjgY[`]klgeg\]dZmad\af_$l`]Z]f]lkl`]qZjaf_
and the importance of formatting

Structure
Model design
The overall model development process and items to cover
during the design phase
Lqha[YddYqgml$kljm[lmj]Yf\gog^YkmalYZd]fYf[aYdeg\]d
9\ghlaf_Yl]ehdYl]YhhjgY[`lgY[`a]n][gfkakl]f[qZ]lo]]f
model worksheets
Mkaf_[gfljgdY[[gmflkYkl`]c]qZmad\af_Zdg[ck^gjl`]
calculations of a model

Timing-related components
;gfkljm[laf_laeaf_Y_klgaf\a[Yl]l`]g[[mjj]f[]g^]n]flk
Yf\Yddgo^gjlaeaf_]paZadalq
Mkaf_h]j[]flY_]Y_klghjg%jYl]al]eko`]j]]n]flkg[[mj
mid period
Overlaying calculated forecasts with actual data or hardcoded
forecast information

Inputs
Assumptions, sensitivities and scenario cases
9dl]jfYlan]dYqgmlk^gjeg\]dafhmlkYf\k[]fYjagk
Mkaf_jYf_]fYe]kYf\\YlYnYda\Ylagflgaf[j]Yk]eg\]d
robustness and improve the user interface
Creating one and two variable data tables to assess
the potential impact of various assumptions on key
output measures

Calculations
Fixed assets and depreciation
Different ways of modelling capital expenditure relating to
different asset classes
Depreciation methodologies including a more streamlined
method for straight-line depreciation where multiple asset
acquisitions take place across the model timeline

Operations modelling
?]f]jYlaf_^gj][Yklk^gjj]n]fm]k$gh]jYlaf_Yf\eYafl]fYf[]
costs and working capital
Mkaf_af\]pYlagf^Y[lgjkZYk]\gf\a^^]j]fl[Yk`golaeaf_
Ykkmehlagfklg[gfn]jlj]Yd[Yk`goklgfgeafYd

<]ZlYf\]imalqfYf[af_
Eg\]ddaf_\a^^]j]fl\jYo\gofYhhjgY[`]klgk]jna[]
funding needs
;gklkj]dYl]\lg\]ZlfYf[af_km[`Ykafl]j]kl$[geeale]fl
fees and arrangement fees

Introduction to Financial Modelling Training course outline

 Different debt repayment methods including annuity,

straight-line, bullet and balloon repayments
=imalqZYka[kYko]ddYkYdl]jfYlan]klg]imalqkm[`YkZja\_]
loans and shareholder loans
;gfkljYafaf_^Y[lgjkgf\ana\]f\\akljaZmlagfkkm[`Yk
accounting restrictions and lockups imposed by lenders

Taxation
Different approaches for modelling corporate tax with potential
adjustments for capital allowances, disallowable costs and loss
carry-forwards
Gl`]jlYp]kkm[`Yk[gfkmehlagflYp]k$Ydl]jfYlan]eafaeme
taxes and withholding tax

Outputs
Financial statements, other schedules and graphs
L`]aehgjlYf[]g^afl]_jYl]\fYf[aYdklYl]e]flkYf\`golg
set them up
AJJYf\FHN[Yd[mdYlagfk$mkaf_Zgl`hjgb][lYf\]imalq
[Yk`gok$[Yd[mdYl]\^jgejkl%`Yf\hjaf[ahd]kYf\mkaf_
Excels in-built functions
Gl`]jc]qgmlhmle]Ykmj]kkm[`Ykd]f\af_Yf\hjglYZadalq
jYlagkYf\af\mkljqCHAk$af[dm\af_lYadgjaf_l`]k]lgoYj\kl`]
end users
?jYh`af_lahk

Implementation and use

Using the model
Creating dashboards, hyperlinks and contents pages for easier
use and navigation around the model
Afl]jhj]laf_l`]eg\]dkgmlhmlkYf\egfalgjaf_c]qe]Ykmj]k
km[`YkCHAkYf\[gn]fYflk
H]j^gjeaf_klj]kkl]klaf_gfYeg\]dZYk]\gf\]ka_fYl]\
sensitivities and in-built scenario cases

Model review and testing

Mk]g^Y[`][ckk`]]llgYmlgeYla[Yddq\]l][lYf\ima[cdq
identify potential modelling errors
Mkaf_Ylggdcalg^eg\]dj]na]ol][`faim]kaf[dm\af_\]dlY
na]okYf\]pl]klaf_
;geegfeg\]ddaf_]jjgjkaf[dm\af_lahkgf`golgkhgll`]e

Other
Dealing with circularities
Why circular references are bad
Lqha[Yd[aj[mdYjala]kk]]faffYf[aYdeg\]dk
E]l`g\k^gj[aj[men]flaf_[aj[mdYjala]k$af[dm\af_
aehd]e]flaf_[ghq%hYkl]eY[jgk

General house keeping

Workbook protection, printing, version control and project
management

Introduction to Financial Modelling Training course outline

Contact details
For further information about the course, please contact the following:
Phil Gunter-Rees
Assistant Director
Valuation & Business modelling

Jon Blackie
Partner
Valuation & Business modelling

Anne Goodfellow
Executive Director
Valuation & Business modelling

G^[]2#,,*(//.(1*+)
Email: pgunter-rees@uk.ey.com

G^[]2#,,*(/1-)**(1
Email: jblackie@uk.ey.com

G^[]2#,,*(/1-)+1.+
Email: agoodfellow@uk.ey.com

=jfklQgmf_DDH$)Egj]Dgf\gfHdY[]$Dgf\gfK=)*9>$Mfal]\Caf_\ge

Introduction to Financial Modelling Training course outline

EY | Assurance | Tax | Transactions | Advisory

About EY
EY is a global leader in assurance, tax, transaction and advisory services.
L`]afka_`lkYf\imYdalqk]jna[]ko]\]dan]j`]dhZmad\ljmklYf\[gf\]f[]
in the capital markets and in economies the world over. We develop
outstanding leaders who team to deliver on our promises to all of
our stakeholders. In so doing, we play a critical role in building a better
working world for our people, for our clients and for our communities.
EY refers to the global organization, and may refer to one or more, of
l`]e]eZ]jjekg^=jfklQgmf_?dgZYdDaeal]\$]Y[`g^o`a[`akY
k]hYjYl]d]_Yd]flalq&=jfklQgmf_?dgZYdDaeal]\$YMC[gehYfqdaeal]\
by guarantee, does not provide services to clients. For more information
about our organization, please visit ey.com.

=jfklQgmf_DDH
L`]MC^aje=jfklQgmf_DDHakYdaeal]\daYZadalqhYjlf]jk`ahj]_akl]j]\af=f_dYf\Yf\OYd]k
oal`j]_akl]j]\fmeZ]jG;+(((()Yf\akYe]eZ]j^ajeg^=jfklQgmf_?dgZYdDaeal]\&
=jfklQgmf_DDH$)Egj]Dgf\gfHdY[]$Dgf\gf$K=)*9>&
*()-=jfklQgmf_DDH&HmZdak`]\afl`]MC&
9ddJa_`lkJ]k]jn]\&
ED None
,+.*)&af\\ MC!))')-&9jlogjcZq;j]Ylan]K]jna[]k?jgmh<]ka_f&
In line with EYs commitment to minimise its impact on the environment, this document
has been printed on paper with a high recycled content.

Information in this publication is intended to provide only a general outline of the subjects covered.
It should neither be regarded as comprehensive nor sufficient for making decisions, nor should it be
mk]\afhdY[]g^hjg^]kkagfYdY\na[]&=jfklQgmf_DDHY[[]hlkfgj]khgfkaZadalq^gjYfqdgkkYjakaf_
from any action taken or not taken by anyone using this material.

]q&[ge'mc