Summary

Quick reference

• 00:05 They say parting is such sweet sorrow.
• 00:09 That's it, we finished this Financial Modeling Course, its application.
• 00:14 Let's have a summary to celebrate.
• 00:16 In the basics course, we talked about best practice modeling techniques.
• 00:22 We talked about the principle of crafts, consistency, robustness,
• 00:26 flexibility and transparency, and from that summary we employed them.
• 00:31 We also looked at the model layouts, tips and tricks, and we use those in our model.
• 00:35 We realized the importance of checks, and we put those in, too.
• 00:39 We've used key functions, but fewer and less complex and sophisticated than you
• 00:43 might think, because you should keep it simple and stupid.
• 00:47 We followed the idea of the financial statement ideology,
• 00:50 that they're not all created equally.
• 00:52 The income statement is the smallest conceptually, then the cash flow
• 00:55 statement, and then the balance sheet, and that's the order we built it.
• 01:00 That borders nicely into this modeling techniques course.
• 01:03 We took it all as assumed knowledge, and
• 01:04 we applied all of these ideas to build a financial model.
• 01:08 Hopefully, you concentrated on the ideas, not the calculations.
• 01:10 Don't worry about a dollar sign here, or why did we refer to this and not that?
• 01:15 Did you understand the key concepts?
• 01:17 That's the important thing.
• 01:18 Hopefully, you enjoyed it.
• 01:21 In summary then, how could we ever go without finishing on this slide?
• 01:26 It's the integrated model.
• 01:27 Remember, when you're building it, it's best to think of that Indian proverb.
• 01:32 How do you eat an elephant one piece at a time?
• 01:34 You dissect it, and you build it systematically and sequentially.
• 01:38 And it just flows.
• 01:40 It's best thought of broken down into its constituent parts.
• 01:43 Remember, we're going from A to B.
• 01:45 It's a communication tool.
• 01:46 We want to get there as directly as possible.
• 01:49 We want to talk about the idea of being a lazy modeler, being efficient and
• 01:53 effective, not lazy modeling and putting hard code in.
• 01:56 It should be straight and direct.
• 01:58 Once we've got that first thing we should do to ensure model integrity,
• 02:01 put the checks in.
• 02:03 Then we go through them.
• 02:04 Work out the operational section.
• 02:06 It may only seem a very small part in here but in a real model that can take over.
• 02:10 Entire time of building a model is you understand the model.
• 02:13 What we've been talking about is process matter expertise.
• 02:17 Subject matter expertise you may or may not have.
• 02:19 You'll need to talk to someone who understands the business, the project,
• 02:21 the divestment, the acquisition, whatever it is you're modeling.
• 02:25 And that all culminates in building this operational section
• 02:28 which will have things in like revenue, cost of goods sold, inventory.
• 02:32 Operating expenditure, capital expenditure, etc.
• 02:36 We'll need to make working capital adjustments.
• 02:38 We all think in P & L terms.
• 02:40 We'll need to be able to reconcile between the P & L and the cash flow statement.
• 02:43 We'll also have to put through asset adjustments in order to take
• 02:46 capex into the financial statements by calculating depreciation and amortization.
• 02:51 All this will require funding from debt inequity and
• 02:53 similar financial instruments that may get more complex in time.
• 02:57 And trust me, that can get really complicated in reality.
• 03:00 But don't worry, we have future course coming up on that.
• 03:04 Then we need to calculate tax, though yes,
• 03:06 that was quite a taxing section we had to go through, but important none the less,
• 03:10 and that all flowed through the financial statements.
• 03:12 Now, that's where we've left this course.
• 03:14 That's where this course ends, but that's not the end of it.
• 03:17 You might be looking at putting in charts and dashboards, and summarizing it, and
• 03:20 doing what-if analysis.
• 03:22 Requiring evaluation techniques and doing charting ratios.
• 03:25 Hmm, I feel another course coming on there.
• 03:28 Maybe there's a part three to this.
• 03:30 But for now, I hope you've enjoyed it.
• 03:32 My name is Liam Bastick.
• 03:33 Thanks for being patient and listening to all my terrible jokes.
• 03:36 And good look with your future in financial modeling.

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