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FIN280 Financial Modelling

This subject focuses on the skills and techniques required to construct financial models. Spreadsheet models are used in business valuation, business analysis and risk management and being able to construct, understand and stress test models is an essential skill in applied finance. This subject will cover model construction, assumptions, advanced excel functionality, detection and prevention of errors, sensitivity analysis, presentation of model output and tips and trips.

This subject contributes to the ICAA Business Valuation Specialisation.

For more information, please refer to the subject outline.

  • Learning outcomes
    • At the completion of this subject students should be able to:

      1. Explain the concept and principles of financial modelling and the skill set required to become a financial modeller.
      2. Use Excel to effectively model business problems and extract essential data from spreadsheets.
      3. Illustrate best practice modelling techniques by applying strategies for user-friendly design, consistency, error reduction and data security.
      4. Effectively summarise and communicate the assumptions, implications and results of spreadsheet models.
      5. Interpret and audit model results in the context of the business situation and address the inherent assumptions through stress testing.
  • Subject content
    • Topic Title
      Topic 1 Introduction to financial modelling
      Topic 2 Building a financial model
      Topic 3 Using Excel in financial modelling
      Topic 4 Functions for financial modelling
      Topic 5 Tools for model display
      Topic 6 Tools for financial modelling
      Topic 7 Common uses of tools in financial modelling
      Topic 8 Model review
      Topic 9 Stress-testing, scenarios, and sensitivity analysis in financial modelling
      Topic 10 Presenting model output

  • Assessment
  • Prerequisites
    • Students enrolling in a Masters level elective subject are assumed to have the pre-requisite knowledge in the three core subjects (FIN101, FIN102 and FIN103).

  • Reading list
    • Prescribed Text

      • Fairhurst, D 2015, Using Excel for Business Analysis: A Guide to Financial Modelling, Revised edition, John Wiley & Sons. ISBN 9781119062462

      Retailers of educational books include Co-op Bookshop and Boffins Bookshop. Texts can also be borrowed from the Kaplan library or other libraries. Details of required and further reading are provided in the subject room.  Purchase of any text other than a prescribed text is not required.