The self-study financial modeling core curriculum is focused on the three primary financial statements, and three types of financial models that collectively provide a strong foundation for an aspiring financial analyst. Perhaps the single most important framework to understand is that of the three-statement model, which is why this website focuses heavily on this video series.
The three statement model requires a working knowledge of the income statement, the balance sheet and the cash flow statement, and for this reason the core curriculum starts with an introduction to the three primary financial statements in the context of building a financial model.
Sidenote: If you are new to Microsoft Excel, ASM includes a video series titled Excel for Models that will get you up to speed as quickly as possible.
The core curriculum is organized to follow this sequence:
- Introduction to Financial Statements: The financial statements are introduced in the context of building a financial model. The objective is not simply to explain what they are, but to demonstrate how they link to each other.
- Integrated Financial Statement Model: This is possibly the most valuable process you can learn as an aspiring financial analyst. It is the foundation upon which all thorough analysis is built. It is a terrific learning exercise because it requires familiarity with the income statement, the balance sheet and the cash flow statement (which is why it is also known as a three-statement model).
- Discounted Cash Flow Model: Building a DCF model introduces some of the most critical aspects of finance including the time value of money, risk and cost of capital.
- Leveraged Buyout Model: The LBO model is often viewed as extraordinarily complex, but it shouldn’t be. This process will introduce you to purchase accounting, making balance sheet adjustments, and detailed debt schedules. It will also really help develop an understanding of capital structure (in my opinion, more so than any other model).
As it relates to building a foundation in financial modeling, these are the three model categories we recommend most highly.
There is also a series titled Business Development, which uses revenue and expense data from the website to demonstrate how to build a financial model for your own startup. It also serves as a lesson in working with data. Whereas all the other models on the site provide data in a neat format, this is an exercise in working with raw data (from bank accounts) to build an income statement and business dashboard.