Year 2 · Core Finance · Corporate Finance & Valuation
Financial Modeling I
Build the core architecture of a professional three-statement model: historical financials, operating drivers, revenue and margin forecasts, working capital, capex and depreciation, debt and interest, statement linking, balance-sheet checks, scenarios and model-quality controls.
LEARNING OBJECTIVES
What you should be able to explain after this lesson
01
Structure a clean professional model with inputs, calculations, outputs and checks.
02
Forecast revenue, margins and operating expenses from explicit business drivers.
03
Build working-capital, capex and depreciation schedules.
04
Link the income statement, cash-flow statement and balance sheet correctly.
05
Build a simple debt and interest schedule without creating uncontrolled circularity.
06
Use model checks, scenarios and sensitivities to make the model auditable and decision-useful.
CONCEPT MAPFrom historical statements to a decision-ready forecast model
A good model is transparent before it is sophisticated
CORE FACTS · SAME IN EVERY MODE
Professional models separate inputs, calculations, outputs and checks so another analyst can audit the logic.
Historical periods should be clearly distinguished from forecast periods.
Hardcoded assumptions should not be hidden inside long formulas.
Consistency in signs, units and date columns is more important than cosmetic complexity.
BeginnerTeaching style changes, knowledge does not.
Think of a financial model as a machine. Inputs are the buttons you control, calculations are the gears inside, outputs are what the machine produces, and checks tell you whether something is broken.
COMPARISON
Good vs weak model design
| Area | Good practice | Weak practice |
|---|---|---|
| Assumptions | Centralized and labeled | Hidden inside formulas |
| Formulas | Consistent across periods | Different logic every column |
| Checks | Visible and automatic | No error controls |
PROFESSIONAL VOCABULARYHardcode / valeur saisie en dur Formula lineage / traçabilité des formules Model check / contrôle du modèle
A manually entered value rather than a formula reference.
The chain showing where a calculated output ultimately comes from.
A formula designed to flag broken accounting or logic.