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LEVEL I:
ADVANCED FINANCIAL
MODELER (AFM) Section 3: Financial Modeling Foundations
SKILLS CHECKLIST
3.1 Financial Modeling Fundamentals
Candidates should have an understanding of the following • Using keyboard shortcuts
Microsoft Excel, accounting and financial modeling skills for the • Working with key modeling formulas and structures
Advanced Financial Modeler exam. • Identifying relevant information in the company’s financial
statements, management discussion & analysis and notes
• Developing reasonable assumptions
Section 1: Microsoft Excel Foundations • Creating the ability to run different scenarios
• Incorporating good modeling standards
1.1 Logical Functions
• Building models with different styles and layouts
• Math and rounding functions
• Clean model design, easy to follow electronically or if printed
• IF function
• AND function
3.2 Operating and Financial Schedules
• OR function
• Building a detailed revenue forecast based on price per unit and
number of units sold
1.2 Lookup and Reference Functions
• Ensuring business is not operating at greater than capacity
• CHOOSE function
• Analysing and making reasonable projections for operating costs
• VLOOKUP function
including fixed and variable costs
• HLOOKUP function
• Fixed assets schedule – includes capital expenditure and
• OFFSET function
depreciation
• INDEX function
• Intangible assets
• MATCH function
• Working capital schedule
• Income tax schedule showing the difference between accounting
1.3 Working with Text and Dates
and taxable income which gives rise to deferred tax items
• Working with dates and using date functions
• CONCATENATE function
3.3 Capital Structure Modeling
• TEXT function
• Modeling a detailed debt schedule
• Incorporate different types of debt including senior secured term
1.4 Sensitivity Analysis
debt and a revolving credit facility
• Running sensitivity analysis with drop-down menus or Data
• Include a cash sweep on certain types of debt
Validation tools
• Calculating interest on cash and debt balances
• Modeling Common Stock, Additional Paid-in Capital and
1.5 Circular references
Preferred Stock accounts
• Understanding model circularity and why some professionals use
• Incorporating dividends, share issues and repurchases
it and others don’t
• Understanding differences between authorized, issued, and
• Locating and managing circular references
outstanding shares
• Eliminating non-intentional circular references
• Calculating coverage and leverage ratios
• Formula error checking
3.4 Three Statement Modeling
1.6 Printing and Formatting
• Building 3-statement projections
• Creating dynamic headings and footnotes in a model
• Constructing the income statement, cash flow statement and
• Setting print area and print titles
balance sheet

Section 2: Accounting Foundations 3.5 Integrity and Error Checking

• Troubleshooting techniques for finding errors
2.1 Accounting Fundamentals • Finding unidentified hard codes quickly and easily
• Structuring of the financial statements • Using Excel to show the formulas underlying output
• Income statement • Using Excel to find inconsistencies in the model
• Cash flow statement • Using Excel’s auditing tool to trace formulas
• Balance sheet • Using Excel tools to help with integrity checking
• Key links between the financial statements • Performing audit trails
• Business transactions reflected in the financial statements