INDIAN INSTITUTE OF MANAGEMENT AMRITSAR

Master of Business Administration

Course Outline

Course Code and Course Financial modeling

Title
Course type Regular/Elective
Pre-requisites (if any) Students should have gone through some
basic and some elective courses in
Accounting and Finance
Course credit/Units 1
Total no. of sessions 20
Session Duration 75 mins
Term Term-6
Year and Batch MBA(07) (2021-23)
Sections (if any) 1

Instructor(s) Prof. C. P. Gupta

Contact Details 9818041308
Office
Consultation Hours

Introduction

Growing competition and complexities in the World of Finance demand evidence-based

(data-based) decision-making systems. Therefore, it is critically significant for a finance
manage to develop necessary Financial models so as to help the management to take
sound decision. We should not forget that – ‘a person in business is successful only when
that person has perfect information.’ Hence, it is imperative for a finance manager to
develop necessary and relevant financial model to support the management decision-
making with perfect information!

This Course is a blend of theory and practice; but major part of the Course is devoted to
hands-on on the basis of strong believe that – if we do, we understand and retain the
knowledge for a long time. This “hands-on” course will require extensive use of computers
and spreadsheets – EXCEL. The main objective is to develop necessary capabilities to
develop spreadsheet-based financial models for providing necessary data and insights
about various financial decision problems to the management.
Learning Outcomes/Course Objectives

This Course is a skill-enhancement course and hence, it will equip the participants with
advanced features of EXCEL, VBA-programming and other emerging tools necessary for
Financial Modeling. It will provide an opportunity to the participants to connect their
learning about various theories in Finance with real-life financial problems and learn
how to provide necessary support to the management for various financial decisions.

Textbooks and Learning Materials:

Text Book(s)

1. Financial Modeling in Excel For Dummies - Danielle Stein Fairhurst, Wiley India

Reference Book(s)

1. Principles of Financial Modeling: Model Design and best practices using excel and
VBA, Michael Rees, Wiley
2. Financial Modeling Building A Fully-Integrated Financial Model Paperback,
Nilesh Parwani, 2007

Additional Reading(s)

1. Module wise-special hand-outs will be provided.

2. Session slides will be shared during each module.

Technology and Software (if any)

• MS-EXCEL, POWER BI and any other software required for Financial Modeling.

Other Resources (Journals, Internet Websites) (if any)

Pedagogy Used/Learning Process

The pedagogy, that we will be followed, is one of participative learning. The class time
will be mostly devoted to providing insights into the challenges of modeling a particular
financial problem. Use of various advance features of EXCEL will be demonstrated and
encourage them to use the same for developing various financial models.

Participants will be given certain case studies with necessary data and will be asked to
develop a meaningful financial model. They will be encouraged to develop necessary user-
defined functions in the class which they may use for solving their own problems.
Participants will be encouraged to work in teams as we believe that considerable learning
from fellow students can happen through team work. Group assignments and
discussions etc. are, therefore, strongly recommended and encouraged.

Evaluation Components/Assessment of Student Learning

Assessment Tool Percentage Description

Quizzes 10% These components are required to check
Midterm Exam 0 and evaluate the students’ understanding
End term Exam 50% of concepts and application of appropriate
tools and techniques.
Class Participation (Case 10% Students are expected to work in teams for
Analysis & Class case analysis as it would provide them
Exercises) opportunities to explore diverse
perspectives for a business problem.
Project 30% This facilitates students to demonstrate
the ability to integrate the information
and the skills accumulated in their course
with the applied research in the respective
areas. This also gives them a chance to
show their skills in oral and writing
communication.
Session Plan:

Session Module Topic Chapter

No. /
Reading
material /
Cases
1 Introduction of Financial Modeling – Need for the Handouts /
Financial Modeling management; Structure and Excel
Challenges; Financial Modeling
standards
2 Modeling time Basic Functions of Time Value of Handouts /
value of money for Money-FV & PV; Annuity; Loan Excel
decision making Amortization; Connecting Loan
structure with Taxation.
3 Financial Modeling Modeling Pay Back Period, NPV and Handouts /
for Capital IRR; Necessary Projections Excel
Budgeting
Decisions
4-5 Risk Modeling for Data Tables, Sensitivity Analysis and Handouts /
capital budgeting Scenario Analysis, Expected NPV Excel
decision and associated Variance – Complete
Model for capital budgeting decisions
6 Modeling Capital Modeling Financial Leverage, capital Handouts /
Structure of a firm structure and weighted average cost Excel
of capital
7-8 Developing Developing a financial model for Handouts /
Financial Models Cost-Volume-Profit Analysis – Break- Excel
for Cost-Volume- Even-Point, and Risk Analysis in
Profit Analysis and Cost-Volume-Profit Analysis
Risk Analysis in it
9-10 Financial Modeling Modeling Price and Yield for different Handouts /
for bonds types of bonds; modeling dynamics of Excel
bonds, interest rate risk modeling
and prediction of prices – Duration
and Convexity
11-12 Modeling risk- Developing models to determine and Handouts /
return of equity analyze Security risk and Return; Excel
and their portfolio Portfolio Risk and Return; and
Efficient Frontier
 13-14 Modeling Option Developing Financial Models for Handouts /
Pricing pricing Binomial Options and Black– Excel
Scholes model
15 Modeling Building a dynamic Dash Board for Handouts /
Dashboard assisting the management to make Excel/Power
Bi
necessary financial decision
16-17 Introduction to Building user-defined Functions Handouts /
VBA and Macros Excel
18-19 Macros for Automation of the Financial Models Handouts /
Automation Excel
20 Group Presentations

Additional Instructions (if any)

Participants are requested to go through their basics and fundamentals of Finance as it

will be assumed that you have sufficient knowledge about the relevant concepts and
theories.

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