Just wanted to get some sort of consensus as to where everyone learned how to create financial models? It seems that all of the entry level ER roles require the applicant to be proficient at this but its not something taught in colleges/univeristies (at least not in mine). Do most people just buy a few books and teach this stuff to themselves or are they lucky enough to get a job where someone will actually teach them? Thanks for any insights into this.
If you get Benninga and Sengupta, and learn how to hit F1 in excel and use Mr. Google you will be fine.
Thanks JOE2010, could you point me to any other authors or books that will help me value securities and/or how to pitch a stock to an interviewer?
I’m not sure it’s really true that entry level jobs require you to have good modelling skills. They will obviously want you not to be completely clueless, but if a firm is hiring people straight out of school, no-one expects you to have a complete modelling skillset. You’ll learn that on the job over a couple of years. That’s not to say you can’t do some good prep work before you interview for these positions of course. If you do a search of this forum you’ll find threads where people make good recommendations on this topic.
I learned by doing it and then refine the method with the books mentioned by JOE2010. I also did a WSP course which is valuable IMO (and somewhat loathed here since I can’t even post the URL without getting banned).
Carson Wrote: ------------------------------------------------------- > I’m not sure it’s really true that entry level > jobs require you to have good modelling skills. > They will obviously want you not to be completely > clueless, but if a firm is hiring people straight > out of school, no-one expects you to have a > complete modelling skillset. You’ll learn that on > the job over a couple of years. +1. I’m pretty sure my employer had to have known that I wasn’t spectacular at modeling when I started, but could tell that I was at least competant. I’ve learned a ton from one of the other analysts at my firm (he’s been doing modeling for about 20 years now). I’ve yet to read a book on it, but plan to do so when I catch a break at work or finish L3…whichever comes first. You can learn a lot just from studying someone else’s models (assuming that they are decent).
Redox, if you’re looking to further develop your modeling skills give me your email.
Got them from QVC for six monthly installments
Redox Wrote: ------------------------------------------------------- > Do most people just buy a few books and teach this > stuff to themselves or are they lucky enough to > get a job where someone will actually teach them? In reality you usually get someone’s old model thrown at you to update for Q4 actuals or a new set of assumptions, after he quits without notice. You’re like what the hell and study the thing for countless nights trying to figure out how it works and make sense of all the wack formula. Soon you figure it out, realize it is crap, fix it, and bam you have modeling skills!
Dude, there are so many free basic models out there. I suggest just finding a few LBO’s, DCF etc models, breaking them apart and then trying to put them back together. Also, try to do it w/o using the mouse, may feel like a PITA in the beginning, however, once you HAVE to build a model quickly, it is a HUGE time saver.
Agreed that you can find tons of free models… just search the internet… literally… Building the model is the easy part. The hard part is coming up with meaningful inputs and making sense of the output. Five different people modeling the same company will generally come up with a different value in a model they build 5/5 times. Also, depending on the company, you can often make a model produce any value you want. That is why the inputs are key. You’d be surpised how often these are wrong by the way, coming from major firms and “experts.”
^ Yep, that guy speaks the truth…let me expand yo. Building a model can be insanely challenging or robotic. If you are modeling DCF or whatever that already exists, pull it off the net, easy, and boring. However you may find yourself modeling a new complex asset class or VC-esque operation in a new untamed market and things can get wild. When you have dozens and dozens of variables and no map to make sense of it that is when it gets awesome. When you go to collect inputs from individuals within the company you find a *wide* range of answers, the more cutting edge the thing you are working on the wider the range…cause nobody f’n knows, hence the importance of modeling yo. When you are done you need to make sense of the model output for the decision makers or investors or whoever, the model is your support. I can’t make a model produce *any* value I want. But I can sure build it in a variety of ways that will give some very different outputs. I worked on one for Gates and we tweaked the hell outta that bad boy before it would give us the answer we wanted. 
Not talking about the inputs but the actual build. Look for “model assumes bla bla bla” for hints on what to be looking at. Finally most every model I’ve inherited from some other dood was wrong. Check everything, check the assumptions, check the logic. Crap models fall into a few categories in my experience. 1) over complex and wrong because nobody understands and can’t see the error, you can spot these with all the circular references and showoff bullsh#t, it hasn’t been properly reviewed in 5 yrs, check the math and find errors, 2) fluff models designed by some MBA to look like they are doing something when they are doing nothing (if you see a three dimensional chart or some bullsh@t it is fluff), burn it and start over 3) logical atrocities, these models are just plain wrong, yet they may be circulating cause nobody smart actually got involved and thought things thru. Modeling stuff kicks a$$, have fun.
Nothing like learning on the job-working hands on- when it comes to modeling. brianr, i want to enhance my modeling skills. email is mutahir@lahorestock.com
brianr Wrote: ------------------------------------------------------- > Redox, if you’re looking to further develop your > modeling skills give me your email. I’m intrigued by this post - shoot me an email 
Karen the only modeling skills you need to worry about certainly dot involve moving a mouse or htting f2
I started by modeling my personal budget and breaking it out. Look at yourself as a small business (a proprietorship if you will). Break out your income statement, your assets, liabilities, and so forth. The same basic principals apply to most companies. Also, you can always look at the consolidated financial statement for any company and start with the essential. Sales, gross and net margins, and basic balance sheet and go from there. Assume a revenue growth rate and have some fun with it.
I’m mostly looking for modelling books with respect to corporate finance and M&A, although I see FM 3ED has a lot of content for other areas. Is this still the best book for me?
This is a good resource for FREE spreadsheets that you can deconstruct. It is really useful to have two monitors for these sorts of excersies so you can alt+~ to see the refreences and then work on your spreadsheet on the other monitor. Enjoy, http://www.exinfm.com/free_spreadsheets.html
I’d rather learn from a well known source than just free-balling my way to modelling knowledge 
I’ll go down that route once I’ve gotten some practice from a structured source of learning. Also, I would imagine saying you learned modelling from XYZ book and applying your knowledge to QED transactions is a lot more professional than saying you downloaded random models off the net and just trial-and-error’ed your way through everything.
Free-ballin’ your way (ie doing) is how you actually learn modeling, books are bullsh@t, in fact if some analyst told me he learned modeling from a book (never heard of anyone actually doing that in the real world) I’d automatically know he was a douche. Sorry, just sayin’.