Modeling Financial Statements

This course is offered only in the fall semester. As announced below, make sure that you can attend the last class because there will be a final exam in the last class.

There are many students on the waitlist. Before contacting me, make sure that you read this email from Dean Corfman regarding this issue.

Important Stern Policy Document

Please read this very important document regarding Stern policies by clicking here.

Disclaimers

• Grading this course is a challenge, and there are no textbooks I can use. I am writing my own materials, but it will take me two more years before I have anything resembling a book.
• The course could easily take up to 10 hours of work per week. Take a look at last year's ratings to see that at least 33% of the class did not find the workload manageable. Don't take this course if you don't have the time to do the assignments.
• You will benefit from this course ONLY IF you are pursuing a career in investment banking, private equity, buy-side or sell-side research, credit research, corporate finance, and valuation.

Prerequisites

• You cannot build meaningful models if you don't know accounting. I will assume that you have taken or should concurrently take Financial Statement Analysis, Financial Reporting and Disclosure, Accounting for Mergers and Acquisitions, and Corporate Finance. I will not repeat or review these concepts.
• You will struggle with this course and will not benefit from it if you did not get an A, A-, or B+ in your core accounting course, core finance course, and other accounting courses, or are otherwise uncomfortable with accounting, finance, or Excel concepts.
• You need to bring a laptop to class with sufficient battery power to last three hours. If you have any technical questions, please contact the IT department (212-998-0180), NOT me. I will not look into technical issues with your laptop, Stern network, or your installed software. The class may not have enough power outlets to charge your laptop.
• I have tried using Excel 2007 but did not find the change worthwhile. All class examples will use Excel 2003, and you are expected to be familiar with it.
• Make sure that you can connect your laptop to the Stern wireless network.

Overview

Various management disciplines teach you how to analyze and forecast parts of a business. Building on this foundation, this course will help you weave your forecasts into coherent spreadsheet-based pro-forma financials. Modeling and projecting comprehensive financial statements provides a reality check on the forecasts, enables "what if" analysis, provides an integrated view of the business, and is a key step in valuation.

The course will start from conceptual examples that illustrate the key intuition and explain linkages between financial statements. It will then build on these examples to forecast the financial statements of real companies.

You can take this 3-credit twelve-session course from 6pm-9pm on Tuesdays from September 25 to December 18. See the schedule below.

Help and Office

• Administrative assistant: Ben Sugimori, bsugimor@stern.nyu.edu, 212-998-0068, Office: KMEC 10-180 (front desk)
• Teaching assistant:purvi.samria@stern.nyu.edu and Anne Cosgrove ac500@stern.nyu.edu
• Class mailing list [Only Anne, Purvi, Ben, and I are authorized to send.]
• Me: dgode@stern.nyu.edu, 212-998-0021, Office: KMEC 10-86.

Materials

• I will not require a textbook because I have never found one that covers modeling financial statements in sufficient detail. I am writing my own materials.
• To access materials, click here: http://people.stern.nyu.edu/dgode/modeling/

Assignments

• See the grading section below.
• There will be 12 on-line SETS of weekly assignments. Each set will have several tests. To access the assignments, visit http://www.almaris.com/assess/. You are already registered at Almaris if you are on my class roster as of September 10. If you were added later, please email me.
• Almaris has already emailed the userid [your original Stern email (not aliases)] and the password (this is different from your Stern password) to your Stern email account. [You can change the registered email.] If you did not get that email, check your spam filter. You can always retrieve the password by having it sent to your Stern email account. Just enter that email address and click login.
• To help you review the basic accounting concepts, I am making my core course CD-ROM available to you at no charge. Please contact my assistant Ben Sugimori (bsugimor@stern.nyu.edu x212-998-0068). The CD will help you with the first four assignments (Progress 1-4). Most of you (at least I hope so) should find the assignments fairly straightforward. These prework assignments require a lot of data entry. Subsequent course assignments require much less data entry. I apologize for any tediousness.
• All of these assignments are from the first 8 weeks of my core course. If you find these prework assignments difficult, I strongly recommend that you consider taking the course next year after you have taken more accounting courses. Even if you took the core with me, I require you to take these tests as the concepts get rusty over time.
• No extensions will be granted unless you have a family or medical emergency. Unexpected demands at work do not qualify as emergencies.
• Final project

Rules

To maximize my time spent on teaching, I want to emphasize the following:

• Please do NOT email me if you plan to miss a class, be late, or leave early.
• All technical issues are between you and Stern IT.
• All assignments are on-line. If you are late, you will get a zero. Make sure that you submit the assignments well in advance so that you are not delayed by technical problems. NO EXTENSIONS will be granted for any reason except medical or family emergencies. If you have religious or personal conflicts, submit the assignments early. The related materials are covered well in advance of the assignments.
• You can discuss the concepts underlying the assignment questions or similar questions with your teammates, but you must work on the actual assignment alone. Copying any part of the answer from someone else is a violation of the Stern ethics code.
• If you have a qualified disability and will require academic accommodation during this course, please contact the Moses Center for Students with Disabilities (CSD, 998-4980) and provide me with a letter from them verifying your registration and outlining the accommodations they recommend. If you will need to take an exam at the CSD, you must submit a completed Exam Accommodations Form to them at least one week prior to the scheduled exam time to be guaranteed accommodation.

Exams and Grading

The grades will be based on the final exam and one project. The assignments can affect your grade adversely if you do not complete them on time. It is not necessary for you to get a full score, but you must show due diligence in completing the assignments. The final exam will be in-class on December 18. The final exam will not be rescheduled for any reasons except medical or family emergencies. Work commitments will not be a valid reason for rescheduling. The final project will count towards 50% of the course grade.

Schedule