How to Prepare To become a Financial Model

Financial Models are are used to correctly assess a firm’s current state, as well as devise a future state in multiple scenarios. Financial modelling is a skillset that any serious Finance student must have and used extensively when you work for Investment Banks, Analytical/Research Firms, KPO’s, Credit rating organizations, Hedge Funds, PE’s, Venture Capitalists and even Startups!

 Here is a quick 10 question basic quiz to test if you are pro or an amateur modeler!

 1)     To start with the basic, walk us through a sample cash flow statement

2)     What are the two ways that the terminal value of a firm can be calculated?

3)     Define the three ratios that help to analyse the liquidity of a company?

4)     How do you calculate the Debt service coverage ratio?

5)     In Excel, which is more useful LOOKUP or VLOOKUP? When should each be used? And what are the pitfalls of each?

6)     What is the difference between NPV and XNPV? When would you use either? What are the limitations of the two?

7)     What is sensitivity analysis? How do you run a sensitivity analysis on a company?

8)     How do you model a leverage buy out? How is it different from a typical M&A deal?

9)     All things equal, what happens when a firm with a lower P/E ratio acquires a firm with a higher P/E ratio? Will the deal be accretive or dilutive? How does it impact EPS?

10)You do not have time to run an extensive financial model. How do you value a firm in 2 minutes?

 If you were able to answer 8/10 questions (without cheating), you are a pro!!! Model away – your financial models will make us proud!

 If you are able to answer 7 and less, no worries. It looks like you need a refresher!

Financial Modeling – Create a Confident Financial Model Yourself

Financial Modeling helps you to gain great skills in Practical Finance, MS-Excel and Business / Industry analysis. This course will help you gain an understanding of how to build robust and dynamic financial models with a special focus on Industry Research, while mastering advanced Excel and the complete art and science of Valuation.

If you are dreaming to make a career as an analyst in Corporate Finance or Investment Bank, and you are just a graduate then this program is for you.`

Imarticus Learning offers 80 hours program which includes the below modules:

·         Modeling Overview and Core Concept

·         Accounting Fundamental and an Understanding of the three financial statements

·         Projecting the three Financial Statements (Case Study Based on Ajanta Cranes)

·         Three Statement Projections Advanced (Case Study- Indigo)

·         Equity Value, Enterprise Value and Multiples (BhartiAirtel)

·         Valuation – The Discounted cash flow (Dr Reddy’s)

·         Valuation: Comparable Public Companies and Comparable Transactions (Dr. Reddy's Pharmaceuticals)

·         Valuation of a Private Company (Anup Pharmaceuticals)

·         Applying Valuation to Real Life Decision making

·         Customizing Models to various transactions

·         Excel Shortcuts & Charting

To check more about this visit http://imarticus.org/financial-modelling-valuation-certification

Why to enroll for this Course? 
Lots of leading banks, manufacturing companies and b-schools have classroom and online editions for this program. This course content is designed, recorded and edited by top professionals who are expertise in Investment Banking, Equity Research, Project Finance and Business Consulting domains at world-class banks.

At the end of this program, you will receive the industry endorsed FMVC certification which will help you to get you the best career opportunities in leading international firms.  

Who can go for this course?

Professionals who are planning to be analysts in Investment Banking, Equity Research, Private Equity Corporate Finance executives Entrepreneurs and Businessmen Business Analysts 

Tips for Cracking The CFA Level 1 Examination

The Chartered Financial Analyst exam is considered to be one of the toughest exams of the Finance world. This exam is conducted by the CFA Institute of America annually and is divided into 3 levels. After clearing all the three levels, a candidate is conferred with the prestigious designation of CFA. This designation not only reflects the expertise but also integrity and intellect of an individual. Once a professional successfully clears all the three levels, they become a member of the charter and are able to avail various benefits, most importantly great career growth. 

As this designation offers many perks including eliminating the need for further qualifying exams, it is also set to be very difficult to crack. Divided into three levels, the first level of this examination gets divided into two sublevels and is conducted twice a year. The eligibility criterion for this exam is that one needs to have around 3-4 years of professional experience with a finance firm. This is one of the reasons why candidates start preparing for the exam as soon as they receive placements. Apart from being extremely difficult to crack, this exam is also said to have very low passing rates; this generally leads to a lot of stress amongst candidates. 

Here are a few tips to crack the CFA level 1 exam with ease

• Ensure that you have all the study material that you would need: books as well as videos. 
• It is always considered to have around 300 hours to study before the exams; one can still crack it in 200 or less hours if they study methodically. Always ensure there is enough time on your side before you begin. 
• Make a detailed scheduled of all the subjects, time to study each subject, hard and easy concepts and then make sure that you stick to it. 
• While it is very important for you to study the rudimentary way (notebook and pen), it is also important to study using various other techniques. One can make use of audio-visuals, mnemonics, anagrams and many others ways to study. 
• As the time to study is lot longer, there are very high chances of one being demotivated or lose interest altogether. Hence it is important to be consistent, be perseverant and not lose focus throughout the months before the exam. 
• While it is important to not be flaky when it comes to studying, it is also important to not over stress oneself by studying continuously.
• There are a lot of institutes that offer short term courses for training candidates to crack the CFA exams. It is always a good choice to opt for course, if one isn’t sure of studying on their own. 
• Mock tests form a very important part of studying for the CFA exam, practice as many sums on the calculator you would use on the exam day. Keep reviewing the study material and don’t study new concepts in the last week towards the exam.
• Go and take a look at the exam centre, be relaxed and keep your mind calm in the last few days. 

Lastly, it is important to get as much rest as possible before the paper; one must be very comfortable about spending the long hours writing the examination. If all the things are done right, there is nothing that can stop you from cracking the exam. To know more about CFA exam visit our website

Reasons Why You Should Go for Finance Courses

                            

Finance courses are the study of how monetary assets are managed, traded and invested.  From the historic perspective, the study of finance seems to be one of the most archaic. The reason for this is that firstly, finance is everything related to money and the second being, since the dawn of civilization and the advent of money; there have existed monetary transactions. Finance thus is a very fruitful career with great benefits and rewards. As this field has such importance in worldly affairs, it is also one of the sought after fields with students, taking up various finance and investment banking courses. Here’s a list of 5 reasons why one should invest in a Financial Course.

The World is All about Finance

Take a person, who earns a certain amount of salary every month. Then, this person goes onto divide his salary for various things like household essentials, school fees, utility bills, loans and then at the end he tries to save some money, for the future or invest it somewhere. Now replace this person with a company and think about all the financial activities it goes through, from capital management to loans, debtor management, and equities and so on, are the things that the company needs to consider. Thus we can infer that at every level, the knowledge of managing finances comes to the fore.

World has Started Taking Notice

As the importance of this field increases, so does the number of aspirants. Lately, there has been a hike in the number of people opting for courses in finance. At the same time, there has also been an increase in the number of institutes providing for courses in finance. There are institutes that have started offering for short term and long term courses, in classroom as well as online format, in finance which are all certification programs.

Real Life Concepts

  Financial concepts like “price” and “value”, have real life usage and are not always confined to the hardcore financial sphere. There have been so many eminent personalities, who have drawn references from the two concepts and drawn parallels with their own works. Those two terms become very philosophically inclined as well, when we talk about the spiritual value and the price paid for certain things, thus in a way their concepts don’t become too dry to grasp. Thus other concepts like overvalue, undervalue also have their come into purview in terms of life.  

Finance is a Very Interesting Field

Money will always remain in fashion so, as long as money is on people’s minds, finance will be a prominent career too. Apart from being an indispensible part of the business world, finance in itself is a concoction of many intriguing theories, which when applied can lead to great results. One can either choose to be an investment banker and go on to achieve new heights, or choose to research all the possibilities and try to find newer concepts and theories.

 Great opportunities

This field offers many lucrative opportunities and the chance to get to one’s dream job possible. There are a number of courses, both short term and long term; offered by many institutes in Mumbai, Chennai, Bangalore and Delhi and other cities in India. A career in this field offers one with the opportunity to land their dream job, become an investor, start their own business and so on, thus making finance a very beneficial field laden with great many benefits.

While investing in finance courses, the important thing is your interest and will to learn. If one is determined then, there are a lot of avenues as well as many courses offered for the same. There are a number of institutes which offer courses in finance for those aspiring for a career herein.

Imarticus Learning is one such institute, offering a host of certification courses in corporate finance as well as financial modeling, retail banking, wealth management and others. 

Source: http://imarticuslearningeducationinstitute.weebly.com/home/5-reasons-why-you-should-invest-in-finance-courses

Disruptive Innovations in Financial Services

Disruptive innovation in Financial Services is having the greatest impact where the delivery is happening through business models which are platform based, light on capital & data & analytics intensive .This is making the industry very innovation focused and competitive as it gears up to provide its customers with upgraded, digitally intensive solutions across business lines such as banking, payments, cards, investment management and many more.

A few central themes emerge in this area and are summarized as follows:

Infrastructural Streamlining

Advanced emerging platforms and decentralized technologies have changed the way information is aggregated & analyzed, improving connectivity and accessibility while reducing the cost & time for accessing information and providing financial solutions across geographies.

Automation

Firms are increasingly relying on and leveraging advanced algorithms and computing power to automate manual activities ,allowing them to offer cheaper, swifter & scalable products and services to clients.

Role of Intermediaries

Latest innovations are changing or eliminating the role of traditional institutions as intermediaries, and offering lower prices and / or higher returns to customers

The Strategic Role of Data

Financial institutions are accessing new data sets like social data, customer online behavior & likes , which is redefining ways in which they are  understanding customers and markets. It helps them to customize and offer bespoke offerings as per client requirement versus generic cookie cutter solutions.

Niche, Customized Products

With extensive availability of customer related data a lot of the financial institutions ,especially the new entrants are creating highly targeted products and services with deep & complex specializations, hence increasing competition and creating pressure for the traditional end-to-end financial services model to unbundle

Customer Empowerment

In this flat world with high end technology & emerging innovations, customers now have access to previously restricted assets and services, more visibility into products and their features and benefits and hence a heightened ability to make intelligent,need based choices making them “prosumers”

Fun Facts You Didn’t Know about the CFA Exam

Zenobia Sethna

The Chartered Financial Analyst (CFA) exam is one of the most prestigious and yet gruelling exams you can give to. Around 20% of those who registers for a CFA exam don’t take it seriously and just don’t turn up on exam day. At least 40% of those who do turn up fail. In June 2015, a meagre 42% of candidates passed CFA Level I. Pretty serious stuff.

Here are some fun facts that you may not be aware of:

1. About 1 in 20 candidates will miss the start of the exam, despite already being in the test center.

On exam day, the doors to the exam hall close 30 minutes before the actual exam starts. This is to ensure all candidates are settled in, calculators and belongings are verified, and all candidates are set to open the test booklet at the preset time.

Though many candidates, despite already being at the exam center, will either miscalculate or are not aware of the closing time. Thus, they end up waiting to be let into the exam hall, which will only happen after the first 30 minutes have passed. So be sure to arrive early and be seated on time.

2. Calculators weren’t allowed up until 1975

Up to 1975, a standard calculator was not allowed in the CFA exams. Candidates originally had to make do with a slide rule. Then you could carry a (15 pound!) electric calculator, which unfortunately needed to be plugged into a wall outlet, so many candidates didn't bother. Count yourself lucky that you have the convenience of a calculator for your exams!

3. You used to be able to smoke during the exam

The exam getting your nerves worked up? Back in the early 70s, candidates could even smoke inside the exam hall! John Privat, CFA, recently gave a humourous exam anecdote when he said
"He was totally agitated and proceeded to chain smoke for five minutes before he even opened the blue book." Doesn't get more Mad Men than this!

4. You couldn't go to the bathroom during the exam in earlier days

Many years ago, candidates weren't allowed to use the bathroom during the exam. Pretty strange, but there you go. The Institute only yielded and changed its rules when a pregnant candidate was ready to call their bluff during one memorable year. Our advice: Go to your heart’s content before the exam. Even if they allow you to take a bathroom break during the exam, you lose precious time from the allotted 3 hour duration.

 5. The most common problem on exam day? Forgotten passports? Nah.

Moving on to more recent times. On interviewing numerous proctors in countless exam centers, we find that the most common problem for candidates is a forgotten calculator. We're not sure what is the reason (I would have thought forgetting your passport would be more common), but make sure you don't make that mistake! Make sure you bring two.

6. CFA results are always announced on Tuesdays
CFA results are always announced on a Tuesday. Here’s the rationale from the CFA Institute: Tuesday is an ideal day for their contact center and client services - It gives sufficient time to answer to weekend queries and get themselves prepared for the heavy flow of communication accompanying a results release.

So there you have it. If you know any more, do let us know. If you are one of the candidates studying for this year’s CFA exam, study hard and all the best! 

Money Laundering - Recent Scandals

Zenobia Sethna

There are significant negative effects of money laundering on economies, including undermining domestic capital formation, depressed growth, and diverting capital away from development. Strict global regulations such as USA Patriot Act, KYC norms, among others, require financial services organizations to implement money laundering programs to prevent and detect illegal activity. And while some have become more vigilant, the roster of big name banks that have been caught red handed in money laundering scandals in recent years, and consequently fined heavily, continues to defy logic.

HSBC: The bank was fined 1.9 billion USD in 2012 of failing to monitor more than 670 billion USD in wire transfers and over 9.4 USD billion in purchases of U.S. currency from HSBC Mexico, allowing for money laundering by drug cartels. The bank also violated US economic sanctions against Iran, Libya, Sudan, Burma and Cuba. The bank was also fined 43 million USD in 2015 to settle a Money Laundering settlement at its Swiss private bank

Bank of New York : In what came to be known as the Benex Scandal, Bank of New York laundered an estimated 7-9 billion USD when suspected links to the Russian ‘mafia’ deposited into “Benex Worldwide” accounts at the Bank of New York between 1996 and 2002. This money was then transferred to the accounts of several companies across Europe.

Standard Chartered : Fined 300 million USD in 2014 over lapses in its anti-money-laundering procedures. The bank was earlier penalized in 2012 for 340 million USD after it was accused of scheming with Iran to hide from US authorities billions of pounds worth of transactions.

BNP Paribas : Fined 8.9 billion USD in 2014 for concealing billions of dollars in transactions for clients in Sudan, Iran and Cuba in violation of U.S. sanctions. The penalty also included a year-long suspension of the bank’s ability to convert foreign currency into US dollars through its New York office. BNP used a network of banks in the Middle East, Europe and Africa to mask dollar-based transfers linked to Sudanese companies. Employees also got rid of information from wire transfers that could have exposed the identity of blacklisted countries.

Credit Suisse : Pleaded guilty to criminal conspiracy charges in 2014 for, among other things, “assisting clients in using sham entities to hide undeclared accounts” and paid $2.8 billion to settle. Notably, this is one of the very rare instances in recent years when regulators have been able to extract a guilty plea from a financial giant.

Most recently, the leak of 11.5 million documents from the Panama law firm Mossack Fonseca, which helps clients hide financial assets, revealed that Swiss giant UBS created 1,100 offshore companies. Other big banks doing business with Mossack Fonseca included Société Générale (979 companies), the Royal Bank of Canada (378), Commerzbank (92), and Credit Suisse (1,105). While the global fight against offshore tax evasion and money laundering has strengthened in recent years, the system adapts cunningly, shifting money to what are at any given time the weakest links in the financial system.