1. DISCOVER . LEARN . EMPOWER
INSTITUTE –University School of Business
DEPARTMENT -Management
MBA
Project Finance and Financial Modelling
: 23BAT-736
MSC: Dr. Tanya Kumar
Assistant Professor
Chandigarh University
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2. https://www.expertmile.com/
Advanced Modelling
Techniques
Course Outcome
Will be covered in this
lecture
Course
Outco
me
Description Blooms
Taxonomy
Level
1 To understand the basic project financing framework,
concepts and process of project finance,
Understand/
Remember
2 To apply the necessary qualitative and quantitative
tools and techniques for mitigation of the project risk
Apply
3 To evaluate different project financing analysis
techniques to compare the outcomes of different
projects
Analyze
4 To structure and appraise financing for large &
medium projects
Evaluate
5 To utilise the understanding of financial modelling to
develop financial models for projects
Design/Create
3. Extrapolate in Excel
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• Extrapolating in Excel means calculating unknown values based on values that you
do know. It helps users make predictions, analyze data and visualize results. You
may use it to predict linear or exponential changes over time. For example, a
company may extrapolate to see how their customer base grows or how expenses
fluctuate.
4. Reasons to use the extrapolate function
• Organizations may want to predict possible business outcomes so that they can
prepare their budgets, marketing strategies and public relations approach. Sales
professionals may use extrapolation to help predict sales trends based on
information from the past. They may also use its visual component to show other
departments, investors or board members data in an accessible format.
Other professionals who may use this function include:
• A scientist who wants to see possible experiment results.
• A teacher who wants to estimate the median score for an upcoming test.
• A bookstore owner who wants to know their approximate expenses for the next
year.
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5. How to use the extrapolate function in Excel
1. Enter the data
•To start, place at least two columns of data in an empty Excel worksheet.
For example, if you're using data about how sales increased as a company
hired more sales professionals, the numbers of sales professionals go in
column A and the corresponding total sales go in column B. You can add
their category titles and units of measurement. Here is an example of how
this might look:
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6. What are the steps for building a
financial model?
• Historical data – input at least 3 years of historical financial
information for the business.
• Ratios & metrics – calculate the historical ratios/metrics for the
business, such as margins, growth rates, asset turnover ratio,
inventory changes, etc.
• Assumptions – continue building the ratios and metrics into the future
by making assumptions about what future margins, growth rates,
asset turnover, and inventory changes will be going forward.
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7. What are the steps for building a
financial model?
• Forecast – forecast the income statement, balance sheet, and cash
flow statement into the future by reversing all the calculations you
used to calculate historical ratios & metrics. In other words, use the
assumptions that you made to fill in the financial statements.
• Valuation – after the forecast is built, the company can be valued
using the Discounted Cash Flow (DCF) analysis method. Learn more
about DCF models and valuation.
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9. Who builds financial models?
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There are many professions and career paths that require financial modeling.
Here are some of the most common ones:
Investment Banking Analysts & Associates
Equity Research Analysts & Associates
Private Equity Analysts & Associates
Credit Analysts
FP&A Analysts & Managers
Corporate Development Analysts & Managers
10. What are the hallmarks of a good financial
model?
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• When building a model, it’s important to follow best practices, which we outline in our courses. A good
model is simple enough that anyone can understand it, yet detailed enough to handle complex situations.
• Here is a list of general best practices for building models in Excel:
• Well-structured, with a good layout
• Easy to follow and understand
• Drivers and assumptions clearly laid out
• Simplicity over complexity
• Accurate
• Focus on important issues
• Visual outputs
• Thanks for reading our guide to financial modeling for beginners (and “dummies”). For more advanced
instruction, please see CFI’s financial modeling courses.
12. •Text Books:
•1. Edward Yescombe, Principles of Project Finance, Yecombe Consulting Ltd.,
Academic Press
•2. Michael Rees, Principles of Financial Modelling: Model Design and Best
Practices Using Excel and VBA , The Wiley Finance Series)
•Reference Book:-
•1. Edward Bodmer, Corporate and project finance modeling, Wiley Finance Series
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References
