'What you learn on… Mastercourses on financial modelling'

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Whether you are an accountant, a banker, an administrator or a manager, it is difficult to get by these days without using Excel, Microsoft’s ubiquitous spreadsheet software.

The package has been around for years and it’s developed in such a way that it has become one of the indispensable tools of office life. Yet, as with all modern IT applications, there is a right way to use it and a wrong way.

Not only that, but, unless you are a professional Excel jockey, you’re probably using fewer than 5 per cent of its capabilities. Maybe you are well aware of this state of affairs, but have you ever thought of doing something to change it?

The financial modelling training provided by BPP will open your eyes to some incredibly useful Excel functions. More crucially, they will teach you how to get the best out of the program.

You will be much better able to do your job and your colleagues will be grateful for the technical guidance you’ll be able to pass on to them.

Excel in excelsis
So what is the difference between simply using Excel and financial modelling? Financial modelling refers to Excel files (models) that clearly derive an answer (output) from a number of assumptions (inputs) via workings.

So, if you are organising a school outing to a castle, for example, you might build a simple model to work out the total cost based on the number of children on the trip, the distance driven by the coach, the cost of entry to the castle and any other assumptions that would affect the cost.

Done correctly, this would tell you the total cost of the exercise, but the real value of the model lies in the scenario analysis that can be performed once the model is built.

What if we take the train there instead? What if we eat at the castle’s café rather than taking packed lunches?

xcel can be used to give you the total cost in any of these circumstances, so you can better decide how you want the day to run. How can training courses help you with something that sounds relatively simple?

Unsurprisingly, there is a right way and a wrong way to go about building such models, too. A poorly constructed model can often produce wrong answers and lead to poor decisions. It may seem obvious, but a high-quality financial model will:

  • Be flexible, making it easy to trace changing inputs through to the outputs.
  • Not fall apart as the inputs change.
  • Look professional and be easy on the eye.

The courses provide numerous tips and golden rules that, if applied with discipline and rigour, will always result in effective, high-quality models.

The courses on offer
BPP offers a number of CIMA Mastercourses in this area, but at the core are “Introduction to financial modelling” and “Intermediate financial modelling”, both of which last for two days.

The focus of these courses is the forecasting of an integrated set of financial statements – ie, the income statement, cash flow statement and statement of financial position.

This could be done for many different purposes – eg, budgeting, credit analysis, business planning, financial analysis etc. On these courses the forecasts are used to value a business and a sensitivity analysis is then performed on that value.

For example, how does the value change as the forecast interest rate fluctuates? Both courses are suitable for accountants and non-accountants, but it’s helpful for delegates to have a basic level of financial literacy.

The introductory course is for people who are concerned about their Excel skills (it uses a theoretical model designed for the classroom), while those more confident with using Excel could attend the intermediate course straight away (it uses a real company as an example).

Both courses have been running for many years, developing along with each new version of Excel, and they invariably receive outstanding feedback.

A typical delegate leaves with the comment: “Crikey – I wish I’d come on this course a few years ago.”

For further details of BBP’s financial modelling courses, available through CIMA Mastercourses, visit www.cimamastercourses.com/IT-skills

Photo: Getty Images

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All future Financial Management online content will now be available through the FM app. Download the free app from the Apple App Store, Google Play or Amazon by searching for 'CIMA FM'.

Old issues will still be available in the archive.

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