Financial modeling is a modern-day skill that brings a form of certainty in an uncertain world. Financial modeling is a trending in corporate finance, but it as much essential for any other form of business – big and small. It can be sued for a variety of reasons other than M&A and investment decisions. Looking at the great demand across the globe a lot of courses have been set up. A number of financial modeling courses in London are recognized globally. Let’s take a look at various aspects of financial modeling.
What is Financial Modeling?
Financial modeling is the process of creating a database or a mathematical model containing details of a business’s operational and financial aspects. It is a summary of a business’s revenue and expenses over a period of time say, 5 years or so.
There are different uses for this database. For instance, upon studying the data, an analyst can understand the sources of income and the causes of expenditure. It also helps in curbing unnecessary expenses, if any.
Based on the existing data and a few assumptions, a forecast is made for the future. It gives a sense of direction for the business entity, given the various economic and financial conditions prevailing in the market. Various investment and financing decisions are taken based on this data.
Why Study Financial Modeling?
Financial modeling is one of the most popular skills in the finance industry. It is a skill that is studied by many but mastered by few individuals. The following are some reasons why it is essential for a financial expert to study financial modeling:
- Financial modeling is used for budgeting and forecasting. Hence, every entrepreneur must have this skill. A business model can come in handy when pitching to potential investors.
- It helps understand the inner working of an organization. i.e. income statement, balance sheet, and cash flow statement.
- With time and promotion, it becomes necessary to have expertise in the field as it helps in the decision-making process.
- It is a skill that is needed in almost all finance jobs in the corporate world. Without financial modeling, an individual may miss a lot of career opportunities. On the other hand, a certification in financial modeling provides exposure to a variety of fields incorporate.
- A basic understanding of the financial structure and various financial models enables informed decision-making.
Qualification/ Eligibility For Course
There are no eligibility criteria for a course in financial modeling. Individuals from all walks of life can take up this course. However, a basic understanding of accounting basics, computers, and MsExcel would be a plus. Freshers can take up this course in order to secure a career in the finance domain.
Working professionals may use this course to upskill themselves in order to move up the career ladder. It is also beneficial for those who want to switch their career to the finance domain. Financial Modeling is basically a framework of a firm’s finances.
It allows an analyst to identify the bottlenecks and challenges that a firm might be unaware of. After the identification, the next appropriate solution is to find a solution that is guided through a financial model.
The act of budgeting and forecasting is common across the corporate. Hence, the job opportunities around this skill are immense. Investment banks, equity research firms, project financial firms, credit rating agencies, and Government and related entities use financial models for their daily operations.
Opportunities Post a Financial Modeling Course
Financial modeling courses in London are quite popular, they open a lot of job opportunities. Some of the positions/opportunities that open up upon mastering the financial modeling course are:
Analyst– As the name suggests, the job of an analyst is to analyze the financial model prepared. In order to be accurate in the analysis, it is essential to have a grasp of the skill. One must be accurate in judging the external factors to be considered while analyzing the financial framework.
Associate – An Associate in a firm is required to prepare customized financial models and presentations for its clients. It also involves being updated about the significant events that may affect the present and future of the firm. Thus, the job of an associate is a mix of financial and operational.
Investment Banking – Investment banking is a section in the financial segment of the corporate that puts an investment banker as an advisor/ consultant regarding the financial decision(s) at hand. As an investment banker, the major job descriptions involve fundamental analysis and valuations of the firm. Financial modeling comes in handy where valuations are involved.
Equity Research Analyst – It is the responsibility of an equity research analyst to produce a thorough and detailed stock market research report. These reports are crucial while taking the investment decisions such as buying, or selling a particular investment.
Being an equity research analyst is a dream job for many & a financial modeling course opens opportunities in this field. An equity research analyst must have knowledge of accounting and MS Excel.
Financial Planning and Manager– Financial Planning & Analysis (FP&A) is the process of using historical data to forecast the future of the firm. Financial models are created to present a detailed report containing financial performance, challenges, and recommendations for the firm to increase its revenue and profits. These financial models are based on assumptions that largely depend upon the decision in hand, market conditions, and company information. Any inaccuracy in making these assumptions can mislead the outcome, thereby the decision-making for the firm.
Financial planning managers provide overall support and work closely with the firm to help formulate and provide strategy and projections for the firm.
Credit Analyst – A credit analyst at a credit rating agency assesses the creditworthiness of a firm. The financial model helps credit analysts to evaluate the firm. The credit analyst evaluates the financial history, ratio analysis, and payment records. A credit analyst is an ideal job opportunity post a financial modeling course.
Corporate finance personnel – A corporate finance employee/ personnel is the heart of the corporate operations and functionalities. Major investment decisions, mergers and acquisitions, capital funding, project finance, and financial restructuring are a few examples. Being at the top of the decision-making process, not only becomes essential to master the art of financial modeling, but it also gives an edge over the competition.
Topics Covered in Financial Modeling Courses in London And Types Of Models
Financial modeling is the study of the revenue and expenses of a firm that works in a dynamic environment. Hence, financial modeling as a course needs constant updates depending on the circumstances.
Generally, a financial modeling course consists of five modules that are named – problem-solving in Ms excel, financial statement analysis, corporate finance, project finance, and equity modeling.
Problem-Solving In Excel – The objective of the first module is to enable the student to understand the basics of Ms excel and the financial math involved. A student must be comfortable handling the heavy data points and creating a story out of the financial numbers involved.
Financial Statement Analysis – The financial statements include an income statement (depicts sales figures, expenses, and profit, a balance sheet (a statement showing the amount of assets and liabilities of the firm), and a cash flow statement (a statement showing how the cash was earned/spent throughout a specified period of time). This module focuses on the creation of these financial statements and doing a ratio analysis and interpretation of these financial statements.
Corporate Finance – Corporate finance revolves around the concepts of the time value of money, IRR (internal rate of return), cost of raising capital, sources, and uses of capital. At the end of this module, the student shall be capable of creating a basic financial model.
Project Finance – The term project finance refers to raising funds for a project for which there is no short-term source of revenue. In the absence of any revenues in the near future, it becomes essential to create a complex financial model from scratch. The model should be enough to accurately evaluate and recommend the best financial option possible.
Equity Modeling – This module aims at valuation and forecasting via sourcing historical data. By the end of this module, the student shall be able to create & evaluate complex financial models.
As mentioned earlier, there are a variety of financial models that are customized as per the objective of the firm and the external environment. Some of the basic models are explained below.
Three-Statement Model
The Three-statement model is the most basic and commonly used financial model. It links and forecasts the three financial statements – income statement, balance sheet, and cash flow statement. It uses historical data to project long-run performance for a collective number of years. It is even used as a foundation for other financial models such as the DCF model and leveraged buy-out model.
Discounted Cash Flow (DCF) Model
The Discounted Cash flow model is an extension of the three-statement model. It is fundamentally based on the concept of the time value of money. It simply forecasts the company’s incoming cash flow discounted back to today’s value, which is called net present value (NPV). It then compares the resultant figure with the weighted average cost of capital (WACC). The advantage of this model is that uses cash flow as a measure of valuation instead of profit.
Merger Model
As the name suggests merger model is prepared in case of mergers and acquisitions of the subject company. The model is created in such a manner that captures the financial performance of both the companies involved, taking into account the adjustment of their merger.
Credit Rating Model
A credit rating model is usually prepared by banks, NBFCs, and other financial institutions with the objective of assessing the creditworthiness of the subject company. A variety of ratios (profitability, liquidity, and solvency) are calculated using the data. This model emphasizes the repayment structure.
Leveraged Buyout Model (LBO)
It is a situation when the buyer or acquired company buys the target company using a very small portion of capital and majorly sourced from debt and non-equity which is raised from the market. The assets of both companies become collateral for loans. The LBO is considered one of the most challenging types of financial models.
Sum Of Parts Model
As the name suggests, this model is created by adding up several DCF models. After this, additional components that are not feasible for the model are added to the value of the business.
Salary Structure
Financial modeling is one of the most demanding skills required in the finance field. Its demand has increased recently due to the recent catastrophe which led to the recession. These events have made the importance of monitoring and forecasting more evident. The field is dynamic and hence requires proper judgment while assuming the necessary factors.
With the introduction of automation, many fear losing jobs. Though automation ensures greater accuracy and performance, it lacks the human touch in the form of communication skills, convincing skills, and complex decision-making needed at different stages of the process.
The starting salary after financial modeling courses in London is as low as GBP 85,000. However, with time and experience the salary increment is substantial. It goes as high as GBP 182,000. The average salary package of a financial modeler in London is GBP 128,183 (Source: https://www.reed.co.uk/average-salary/average-financial-modeller-salary-in-london)
Top Seven Financial Modeling Courses in London
Some people are born with a knack for financial intelligence and decision-making. However, many struggle even after completion of relevant courses in the field. This is primarily a lack of practical knowledge and proper exposure in the field. A financial modeling course comes as a blessing to the latter. Some of the popular financial modeling courses in London are given below.
1. IIM SKILLS
Course Name: Online Financial Modeling Course
Number of lectures / Duration: 3 months
Course Fee: GBP 414.98+ taxes or INR 39,900 + 18% GST
Mode of Study: online
IIM SKILLS is an Indian institution that offers a variety of courses. Its vision is to provide education that bridges the gap between contemporary education and the skills that are in demand. The financial modeling and valuation course is an online course that also provides practical exposure via its internship program.
This certification course is recognized by the MSME Govt. of India. There are six modules – Basic and advanced Excel, accounting concepts and financial statements, Ratio/KPI analysis, technical financial modeling, different types of financial models, and business valuation.
2. City Training UK
Course Name: Financial Modeling Course
Number of lectures / Duration: 4 months
Course Fee: GBP 500+ VAT
Mode of Study: online
City Training UK is one of the prestigious financial modeling courses in London. It has been one of the largest providers of in-house training programs. This institute based in Saint James, London is founded and managed by several ex-investment bankers who train candidates themselves.
This institute is ranked as one of the top financial modeling courses in London due to its experienced, approachable faculty and practical program. This four-month course covers the fundamentals of financial modeling, three-statement modeling, financial modeling, forecasting, integrity, and error checking.
3. Go Skills
Course Name: Financial Modeling Course
Number of lectures / Duration: 59 lectures / open
Course Fee: INR 1400 per month / INR 9,996 per year (for individuals)
Mode of Study: online / recorded videos
Go Skills is an online education platform that uses pre-recorded videos as a medium to educate its students. This institute has a global presence and its online presence makes it a popular choice amongst individuals and firms. It is quite popular for its financial modeling courses in London.
It offers two variety of courses in financial modeling – one is a beginner level course and the other course is an intermediate level course. Both courses are Microsoft partner & CPD – certified. The pre-recorded videos are short and crisp making it easier to grasp the concepts.
Financial Modeling Basics – This is a basic-level course that introduces the fundamentals of financial modeling. It contains 55 practical tutorials that aim to improve MS Excel skills, introduce different designs of financial models, and building of a financial model.
Financial Modeling Technique – This financial modeling course is designed for those candidates who have mastered the basic skill of financial modeling. This course contains 59 practical course that covers financial statements theory and how they link together using MS Excel functions and financial modeling basics.
Recommended Reads:
- Financial Modeling Courses in India
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- Financial Modeling Courses in Melboure
- Financial Modeling Courses in Singapore
4. Corporate Finance Institute (CFI)
Course Name: Financial Modeling and Valuation Analyst program (FMVA)
Number of lectures / Duration: 2810 lectures
Course Fee: $497 per year or $847 per year for self-study and full immersion mode respectively
Mode of Study: online
Established in 2016, CFI is globally known for its courses in the banking and finance industry. It also offers financial modeling courses in London. The Financial Modeling and Valuation Analyst certification program is a certified course that has been created by market leaders who have taught in various institutes and organizations.
The FMVA course is a certification program designed to upgrade the candidate’s skills in financial analysis, budgeting and forecasting, and financial modeling. The course is a good choice for those who want to sharpen their research skills. At the end of the course, one needs to take a test that has a minimum passing grade of 70%.
The FMVA course is available in two options – Self Study and Full immersion Costing $497/year and $847/ year respectively. While course details remain the same, the full immersion provides access to Financial Tools such as Macabacus Productivity, Capital IQ, Pitchbook Access, Vertical Access, etc.
5. Udemy
Course Name: Financial Modeling and Valuation course
Number of lectures / Duration: 337 lectures / 19 hours
Course Fee: INR 3,199
Mode of Study: online
Udemy is another online learning platform that is one of the popular choices for financial modeling courses in London. Its economic pricing and variety of financial modeling courses make it a feasible option for many.
It offers one of the best-selling financial modeling courses offered by 365 Careers. The course videos are up-to-date and easy to download. Key contents of the course include basic to advanced Excel, financial modeling fundamentals, company valuation, merger & acquisition, financial models, and capital budgeting.
6. London School Of Business And Finance
Course Name: Module from the postgraduate certificate in finance
Number of lectures: 10 weeks; one lecture per week
Course Fee: GBP 1,150
Mode of Study: London Campus or live-online
The London School Of Business And Finance is of the most well-known institutes in London. It has been offering a variety of courses similar to financial modeling courses in London since 2003. The main objective of the institute is to provide quality professional education to its students in London and abroad.
In 2013, the school won the Queen’s Award for Enterprise. The School has also been a recipient of two Global Business Excellence Awards for ‘Outstanding Educational Service’ and ‘Outstanding Executive’ in 2014.
The course aims to help its student understand the relationship between items in financial statements, tax computations, financial modeling of deferred tax, etc. It covers forecasting models, managerial accounting, and decision-making.
This course is beneficial for those who want to learn about the financial model and seek improvement in skills in finance. The minimum eligibility criteria for the course are an undergraduate degree or higher education or relevant work experience and common European Framework level B2 or equivalent.
Frequently Asked Questions: Financial Modeling Courses in London
1. Is financial modeling worth it?
Ans. Finance is an essential field in any country’s economy. Every company, every bank has a finance department where business decisions regarding real-life situations are taken. Financial modeling is the key to all these problems. It makes the decision-making process easier. Hence, the skill is absolutely necessary for any finance professional.
2. Which mode of financial modeling courses in London are better – on-site or online?
Ans. Both options are viable from financial modeling courses in London. An on-site course helps you to experience the traditional way of education, you can get your doubts cleared immediately. You even get to have the undivided attention of the faculty. However, with digitalization, it is convenient to go for an online course. You can access the class whenever, wherever you want.
In this busy world, with different lifestyles and schedules, it becomes sensible to go for an online course. One additional advantage of online courses is global access, you can take any financial modeling courses in London while sitting in New York or any other corner. One must weigh the pros and cons of the methods and choose for themselves.
3. Can financial modeling be done using other platforms?
Ans. Conventionally, financial modeling is done using an Excel spreadsheet. However, with automation companies are welcoming the concept of automation for financial modeling. While Ms excel is a customizable way of creating a financial model from scratch for different layouts, structures, and calculations, it is prone to errors. On the other hand, automation is error-free but it is difficult to accommodate all the elements to a company or asset.