Theory Of Financial Modeling: Valuation & Forecasting

Master financial statement integration, DCF valuation, forecasting techniques and risk analysis to build robust models.

What you'll learn

Build dynamic financial models by linking income statement, balance sheet and cash flow for seamless scenario updates.

Apply DCF valuation, calculate WACC, terminal value and equity value using both FCFF and FCFE methodologies.

Forecast revenues, expenses, working capital and capex with top-down and bottom-up approaches for accurate projections.

Perform sensitivity analysis, risk assessment and scenario planning to evaluate model resilience under varying conditions.

Requirements

Basic accounting and corporate finance knowledge, proficiency with Excel (formulas and pivot tables) and access to spreadsheet software. No programming skills needed.

Description

Welcome to 'Theory of Financial Modeling: Valuation & Forecasting Principles'. In this comprehensive course, you will master the theoretical foundations and practical applications behind robust financial models. Whether you aim to value companies, forecast future cash flows, or stress test your assumptions, this course provides the structured framework and hands-on examples you need to build credibility and skill.Through five chapters and over 40 lessons, we begin by defining financial models, exploring core statements and best practices for model architecture. You will learn how to integrate your income statement, balance sheet, and cash flow statement into a dynamic template that updates in real time when assumptions change.In our Valuation Principles section, we delve deeply into Discounted Cash Flow analysis. You will forecast free cash flows to both the firm and equity, calculate the weighted average cost of capital (WACC), and estimate terminal values using perpetual growth and exit multiple approaches. You will also explore relative valuation and multiples, adjusting for debt, cash, non-operating balances, and common valuation pitfalls. By the end of this section, you will have the confidence to derive enterprise and equity valuations with precision and rigor.Next, in Forecasting Principles, you will apply both top-down and bottom-up revenue forecasting techniques, model operating expenses and cost behavior, and project working capital cycles. You will structure capital expenditure schedules, depreciation methods, and financing assumptions to reflect realistic investment and funding scenarios. Our cash flow forecasting lessons will tie together operating, investing, and financing activities into a unified statement, ensuring consistency and reconciliation across your model outputs.We then guide you through scenario planning and stress testing frameworks so you can assess model resilience under base, optimistic, and pessimistic cases. You will conduct sensitivity analyses to quantify how key drivers impact valuation outcomes and use version control and audit checks to maintain transparency and accuracy.By the final chapter, you will have developed a professional-grade financial model that incorporates best practices in design, documentation, and error checking. You will also receive guidance on advanced techniques and recommended resources for continued growth beyond the classroom.This course is delivered with clear, step-by-step lectures and real-world examples. All demonstrations use standard spreadsheet software (Excel or Google Sheets). No specialized programming is required. The theoretical concepts are grounded in proven academic frameworks and practical business applications.Enroll today to elevate your financial modeling skills, enhance your analytical capabilities, and unlock new career opportunities in corporate finance, investment banking, private equity, or entrepreneurship.

Overview

Section 1: Introduction

Lecture 1 Hello

Section 2: Foundations of Financial Modeling

Lecture 2 What Is Financial Modeling

Lecture 3 Core Financial Statements

Lecture 4 Linking and Integrating Statements

Lecture 5 Model Structure and Design Principles

Lecture 6 Identifying Key Assumptions and Drivers

Lecture 7 Time Value of Money and Discounting

Lecture 8 Risk, Uncertainty and Sensitivity

Lecture 9 Data Gathering and Validation

Section 3: Valuation Principles

Lecture 10 Foundations of Valuation

Lecture 11 Discounted Cash Flow (DCF) Methodology

Lecture 12 Free Cash Flow to Firm vs. Equity

Lecture 13 Cost of Capital and WACC

Lecture 14 Terminal Value Calculation Methods

Lecture 15 Relative Valuation and Multiples

Lecture 16 Adjustments for Debt, Cash and Non-operating Items

Lecture 17 Common Pitfalls and Model Audit

Section 4: Forecasting Principles

Lecture 18 Revenue Forecasting Approaches

Lecture 19 Expense and Cost Projections

Lecture 20 Working Capital Forecasting

Lecture 21 Capital Expenditure and Depreciation

Lecture 22 Financing Assumptions Debt & Equity

Lecture 23 Cash Flow Forecasting and Integration

Lecture 24 Scenario Planning and Stress Testing

Section 5: Conclusions

Lecture 25 Summary and Next Steps

Finance professionals, analysts, MBA students and entrepreneurs seeking to master financial modeling, valuation and forecasting principles to support investment decisions and strategic planning.