Learning to build a fully dynamic three-way model is an important part of becoming a financial modeller, and a pre-requisite to being certified by the Financial Modeling Institute (FMI). A three-way model refers to the three financial statements of a company; the P&L (Income Statement), Cashflow and Balance Sheet. An FMI certified financial modeller should be able to build these statements, and link them dynamically so as to be able to perform scenario analysis;.. all in under four hours!
To give you an idea of what the model should look like, watch as expert financial modeller Danielle Stein Fairhurst demonstrates a full mock exam model build from start to finish on time-lapse. There are several ways of passing the exam, and this video demonstrates a horizontal model layout.
During the exam, you’re given an Excel file which contains usually three years of historical financial statements, as well as some instructions, and your task is to forecast out these statements over the next five years. It’s closed-book, so you are not able to reference any external materials and is currently held virtually under strict proctored conditions.
Enrol in the exam prep online course from FMI Approved Training Provider, Plum Solutions, to receive the file downloads and 7 hours of step-by-step video training. You’ll also get to sit a mock exam just like the case study demonstrated in the video, and receive individualised feedback on your performance prior to the exam.
