SBM-NMIMS: COURSE TEACHING PLAN

Assurance of Learning AOL Specific

Course Code
Financial Modelling
Course Title
Course Prof. Sudhanshu Pani, Dr. Hema Gwalani
Instructor/s
1.5
Credit Value
Programme & FTMBA Year I: Trimester III
Trimester
First year courses in finance (Financial Accounting, Management Accounting, Financial
Pre-requisite Statement Analysis, Value, Risk & Capital Markets, Corporate Finance)
CLOs – (in bracket state the PLOs to map)

CLO 1) To develop skills in constructing financial model of a business using physical

and financial metrics (PLO 2a)

Learning CLO 2) To learn to build detailed forecasts of financial statements (PLO 2a)
Objectives
CLO 3) To develop skills in preparing a company valuation model (PLO 2b)

CLO 4) To adapt modelling tools that support financial analysis and decision-making
under uncertainty (PLO 3a)

Upon completion of this course students will be able to:

Learning 1) Apply the basic rules of effective spreadsheet modelling

Outcomes
2) Prepare financial forecasts and valuation models

3) Use spreadsheet models to support business decision making and financial analysis

Financial models are used to evaluate alternative financial decisions or to predict

outcomes under probable scenarios. Financial modelling is therefore a key skill required
to support decision-making across domains such as project finance, entrepreneurial
finance, investment analysis, credit appraisals, M&A and investment banking.
Course
Description This course focusses on building student capabilities in preparing the financial model of
a company in spreadsheets, integrating the concepts learnt in finance courses studied
during the first year of the MBA program. All the sessions are designed based on a
hands-on approach, with students working on the financial models in the class.

Specific assessment 1.5 AOL CLO CLO CLO CLO

methods Credit Instruments 1 2 3 4

Class Participation 10
Evaluation
Pattern Group Project 1 25 Rubric 15 10

Group Project 2 15 Rubric 8 7

Total 50 15 10 8 7

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 Topics / Sub -topics
Chapter detail
Details of pedagogy adopted
Sessions Learning Outcome if / Article Reference / Case
for class engagement - Class
Studies
provided session wise Exercises etc.

Module 1: Modelling Note and Case Exercises: Class Exercise in Spreadsheets:

Basics Good Modelling Practices in
1 Learning Outcomes
Basic rules & good Microsoft Excel (Ivey
Learning basic rules of building
modelling practices Publishing W16408)
an effective model
Modelling logic 212 Degree Fahrenheit: Class Exercise in Spreadsheets:

2 Revenue model of a start-up, Learning Outcomes

break-even analysis To understand practice steps in
applying basic modelling logic
for a start up
Module 2: Financial MRF Tyres: Financial Class Exercise in Spreadsheets:
Statement Statement Forecasts (1) Learning Outcomes
Forecasting 1.To learn and practice
Modelling sequence and
3 Modelling layout & linkages for Financial
linkages Statement Forecasting
2.Preparing the revenue &
Revenue & operating
operating profit model of a
profitability model
listed company
Revenue & operating Forecasting of the income In-Class Group Exercise on
profit model statement of a listed allotted Assigned Company
preparation company ( group wise) Learning Outcomes
4 Preparing the revenue &
operating profit model of a
listed company by applying the
modeling sequence learned.
Three-statement model MRF Tyres: Financial Class Exercise in Spreadsheets:
preparation Statement Forecasts ( all Learning Outcomes
three financial statements (2) Forecasting the models for
5 three financial statements as
per the modeling sequence and
linkages between financial
statements.
Three statement model Forecasting of Financial In-Class Group Exercise on
preparation Statement of a listed allotted Assigned Company
company ( group wise) Learning Outcomes
6 Forecasting the models for
three financial statements as
per the modeling sequence and
linkages between financial
statements.
Module 3: Company MRF Tyres: DCF Valuation Class Exercise in Spreadsheets:
Valuation Learning Outcomes
7 Company Valuation of a listed
DCF valuation company and reaching the
intrinsic value calculation

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 DCF valuation Intrinsic value calculation of
a listed allotted company-
GroupWise
8 Learning Outcomes
Module 4: DND Flyover (Noida Toll
Modelling Bridge): Scenario
9 Uncertainty
Analysis, Sensitivity
Tools for modelling Analysis, Goal Seek &
uncertainty
Monte Carlo simulation
Modelling DND Flyover (Noida Toll
uncertainty Bridge): Scenario Analysis,
Sensitivity Analysis, Goal
10
Seek & Monte Carlo
simulation
In-Class Group Exercise on
Assigned Company
Company Valuation of a listed
company and reaching the
intrinsic value calculation
Class Exercise in Spreadsheets:
Learning Outcomes
Capital investment decision
under uncertainty
In-Class Group Exercise on
Assigned Company
Learning Outcomes
Capital investment decision
under uncertainty by applying
tools of uncertainty

Reading List Reference Texts

and
References Timothy R. Mayes (2013). Financial Analysis with Microsoft Excel. Cengage. 7th Edition.

(along with Benninga, Simon (2014). Financial Modelling. MIT Press. 4th Edition
details of
year of Mckinsey & Company Inc., Tim Koller, Marc Goedhart, David Wessels (2015). Valuation:
Publication) Measuring and Managing the Value of Companies, John Wiley & Sons. 6th Edition.

Damodaran, Aswath (2012). Investment Valuation. John Wiley & Sons. 3rd Edition.

Prepared by Faculty Team Area & Program chairpersons

Faculty Chair AOL Approved by Dean SBM

Approved by Associate Deans

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Group Projects

The two group projects involve preparing detailed financial model, financial statement projections,
discounted cash flow valuation model and applying uncertainty modelling tools.

For the purpose of the project, the class will be divided into teams. Each team will need to work on a
listed company. Each team will be required to make 2 submissions:
1. Group project 1:
Financial model and detailed financial statement projections for the company – Submission
after Week 6 (dates will be notified in advance). The detailed financial statement projections
model should include apart from the three financial statements, a revenue model and where
applicable a debt schedule. The forecasts should be prepared for at least 5 years.

2. Group project 2:
Discounted cash flow valuation & uncertainty model – Submission after Week 10 (dates will
be notified in advance). The discounted cash flow valuation model would involve estimating
the free cash flows, the terminal value and the cost of capital as intermediate steps in
estimating the value of the firm. The model should be accompanied by scenario analysis,
sensitivity analysis, and Monte Carlo simulation.

Project Rubrics

Rubric for Group Project 1

Financial model of the Financial model of the Financial Statement
business - Modelling logic business - Good modelling Forecasts
practices
10 marks (CLO 1) 5 marks (CLO 1) 10 marks (CLO 2)
*Identification of revenue, *Clearly defined inputs, *Correct worksheet flow
cost & margin drivers entered only once *Correct linkages
*Economic rationale *Transparent, step-wise, *Accuracy
explained easy to follow processes *Interpretation of results
*Rigorous methodology *Outputs are easy to access
*Reasonable assumptions & presentable
*Reliable information
sources

Rubric for Group Project 2

Company Valuation Modelling Uncertainty
8 marks (CLO 3) 7 marks (CLO 4)
*Clearly articulated *Use of correct tools
rationale for choices made *Rationale for selection of
for modelling cash flows key variables to change
and cost of capital *Rationale for the range
*Reasonable assumptions used for key variables
*Reliable information *Interpretation of results
sources
*Interpretation of results

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Levels of grading on each parameter of Project 1 and Project 2
Excellent: 80% - 100%
Satisfactory: 50% - 80%
Unsatisfactory: < 50%

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