Module Overview

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[00:00:09.38] IAN SCHNOOR: Welcome back. By now, I hope you've had a chance to watch
the first video, where I shared a little bit about my background and the purpose of this module. In
this video, I want to share with you a general overview for the entire financial modeling module
and how we're going to be spending our time together over this entire series.

[00:00:31.61] So let me go ahead and share my screen. I like to keep some notes, and that way,
you can see what I'm doing on the screen in addition to hearing me and listening to me speak.

[00:00:42.65] So as a reminder, my name is Ian Schnoor, and again, I provided some of my

background in the last video. You'll see that over the upcoming videos, I will be keeping this file
which has a bunch of notes, and you'll be able to take your own notes and see on the screen some
examples and other ideas that I'm going to be talking to you about over the entire program.

[00:01:04.76] So let's start quickly here with a goal. My overall goal is very, very simple. My
goal for all of you is that if you build this model with me and you practice and you stay with me,
you will improve your financial modeling skills, and you will be able to build a financial model
of a company. I know maybe that's a lofty goal, but that is my big goal overall is I want you to
leave this program, this financial modeling module, and be able to feel comfortable and
confident that you can build a financial model of any company.

[00:01:42.38] So let's go through and talk in this video about what's going to happen during this
entire series. First of all, let's review the specific topics that we are going to cover together
during the series.

[00:01:55.84] Number one, we're going to spend a fair bit of time during this series talking about
financial model design and structure. And one of the things you're going to hear from me a lot,
because I'm a big advocate, is that a financial model has to be so much more than just a big
calculator in Excel. A good financial model has to be well-designed, well-organized.

[00:02:18.52] I want you to use your own personality. You don't need to simply copy and repeat
the design I'm going to show you and that I'm going to share with you in the model we're going
to build.

[00:02:27.76] Put your own stamp on it. Put your own personality. Use your own thoughts and
your own ideas for style, but a model has to be well-designed, organized, beautiful, and is really
important that it can do that. I'll talk about that more as we get through the program. So we'll be
covering and talking a lot about optimal design and structure every step of the way.

[00:02:47.95] We will be spending a little bit of time during this program during the module on
Excel skills. Excel is our tool. That's the tool we use usually in building financial models. So I'm
going to share with you and show you some amazing Excel skills that you can use when you
build up models. You'll be able to use these skills in other Excel spreadsheets as well, but
certainly, you'll find them helpful in your modeling.

[00:03:10.63] We will look at how to calculate and build schedules. All the calculations that you
need in a powerful, effective financial model. We're going to look at how to build up the
company's integrated financial statements there's a very specific approach, a very specific
methodology that I think you're really going to enjoy about how to very cleanly and simply build
up a company's financial statements.

[00:03:34.91] And then last, we're going to look at how to troubleshoot. What happens when
something goes wrong, and we'll touch on that towards the very end of this module.

[00:03:46.49] We're going to look at the optimal order, the optimal order to build a financial
model. And you'll see in terms of the way I cover it in this series, I believe that the optimal order
is to start with assumptions. So we're going to spend a decent amount of time over the next few
videos talking about planning and assumptions and how to get the data you need. It's always a
critical part of modeling.

[00:04:09.40] From there, we will look at how to build scenarios. How to manage uncertainty
and volatility in models, and you'll know how very soon to build up a really powerful scenarios
page within a model.

[00:04:22.60] We will look at how to build the appropriate calculations on schedules. Critical
pieces of any model, like revenues and operating costs, depreciation, income tax, working
capital, debt and equity. Some models have others, but these are pretty common foundational
pieces of a financial model. And then we'll look at how to build up the financial statements. We
usually do that towards the end.

[00:04:49.26] What are we not covering? In this course, we will be covering a lot of content, a
lot of topics, but there are some things we will not be covering or not covering in lots of detail.
And the first is accounting.

[00:05:01.05] Yes, we will be talking about a lot of accounting issues, but this is not an
accounting course per se. I'm going to assume that you already know what an income statement
is and what a balance sheet is. I'm going to understand that you have a decent understanding of
accounting concepts, like working capital. I will be discussing them, I will be reviewing them,
but if you feel like you need to better understand those concepts, you might want to look at some
other resources or other materials to get a little bit more comfortable as we go along.

[00:05:32.76] Excel training. We will be doing a lot. I will be covering a lot of Excel skills
during this program but not everything. There will be lots of Excel skills that we don't do.

[00:05:42.39] If your Excel skills are weak and you feel like you really want to bolster and boost
your technical Excel skills, you might want to do a standalone Excel course to get more
comfortable using the keyboard, navigating, working quickly. Your Excel skills will come a long
way during this program, but you still may want some other resources as well.
[00:06:03.10] And last, in-depth business concepts and issues. So as an example, we will talk
about key things like debt and working capital and depreciation. But if you really don't know
much about debt, then you may want to go back to your CFA materials or just some other
materials to get even more comfortable with those business concepts.

[00:06:23.09] So what sorts of resources will be available to you as part of this financial
modeling module? First of all, there's the video series. We're going to spend a lot of time
together over all the upcoming videos, and there'll be a lot of videos that you will have access to
that teach you both the ideas, the knowledge, and the skills to build up a model.

[00:06:43.00] There are worksheet files. There are actually three different worksheet files, and
I'll talk about those down below. And last, there's the completed model that you have access to
that you can use as a reference and as a resource going forward.

[00:06:57.99] So let's now talk about the worksheet files. As I mentioned earlier, my goal is that
I want you to build the model along with me. As I go through a video, every step of the way, I
would love it if you built with me so that your hands got into it, so you actually felt comfortable
that you had the skills to build. It's so important in modeling.

[00:07:18.62] For this particular program, I actually built three different worksheet files. You
need to pick one for the program as you go through with me. Now, let me talk about what's here.
And the reason I've done this is because I know that there's going to be a very wide range of
experiences and a wide range of skills in this program with me.

[00:07:39.87] So first of all, there's a beginner worksheet file. This is, no surprise, this is
intended for those of you who really haven't done much financial modeling before. If you've
really never done much modeling or you're quite new to it, you may want to use the beginner
worksheet file as you follow along with me.

[00:07:58.70] In this file, most of the structure of the model has been provided, but a lot of the
formulas are missing, and I'll give you guidance on which formulas you need to build up. This
will give you a good sense for the mechanics and the flow and how the formulas work to pull it
all together.

[00:08:16.58] Second, if you have done some financial modeling in your past, if you've built a
few models and you've done a little bit of modeling, you may want to use the intermediate
worksheet file that I've made available. In this one, some of the structure is there, but most of the
formulas are missing, and you'll have to do a little bit more building. So this version is a more
difficult one. It's the same file, but there's more work to do to get the model built.

[00:08:43.13] And finally, for those of you who have done a fair bit of modeling and you want a
real challenge, there's an advanced worksheet file. In this file, only the historical financials have
been provided, and you're going to have to build the entire model from scratch with me.

[00:09:01.05] So as I build, you'll have to build it along. You'll have to add sheets, add sections,
build it up as you would in real life. And so if you want a real challenge, I would encourage you
to work on this one. Now, the good news is, you can do one and then later do the second and
then do the advanced one after you've done the first couple. You can work your way up.

[00:09:23.01] So let's talk about next steps before we move on. So next steps, once you've gone
through all the videos, once you've gone through all the videos and followed along with me, I
would say it's so important to practice. Financial modeling is a skill. And like any skill in life,
whether it's a sport or a musical instrument, you must practice over and over.

[00:09:43.52] So how do I recommend you practice? Well, do the model in this module over and
over a few times. And if you started with the beginner worksheet file, try the intermediate one. If
you tried the intermediate one, then try the advanced one. Practice. Do this a few different times.

[00:10:01.04] And then once you have built the model in this program a few times, try to build
your own model from scratch using the same approach. Pick a public company, any public
company in the world. Download their historical financial statements and then try to build it up
using the discipline and methodology that we're covering in this program.

[00:10:22.97] So that's a review of what we're going to do, how we're going to spend our time,
what we're going to cover, what we're not cover, and all the resources available. In the next
video, we're going to start talking about modeling as a discipline. I look forward to seeing you
then.

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