BAFN607 - Financial Modelling and Risk Analysis

Year

Credit points

Campus offering

Prerequisites

Teaching organisation

Unit rationale, description and aim

This unit is a specified unit for the Master of Finance and Graduate Certificate in Finance. Modelling is an essential part of business planning and decision making and is an integral part of assessing potential business outcomes and their variability. This unit explores the concepts that underpin financial modelling and develops the practical modelling skills of students. The unit covers the design and architecture of financial models as well as their construction, use, presentation and flexibility. Topics include financial forecasting, sensitivity analysis, valuations and risk analysis with an emphasis on how students apply principles of subsidiarity in the decision-making process. The over-arching aim of the unit is to guide you to understand and appreciate the concepts and characteristics of financial risks and to acquire the competencies to measure and manage these risks.

Learning outcomes

To successfully complete this unit you will be able to demonstrate you have achieved the learning outcomes (LO) detailed in the below table.

Each outcome is informed by a number of graduate capabilities (GC) to ensure your work in this, and every unit, is part of a larger goal of graduating from ACU with the attributes of insight, empathy, imagination and impact.

Explore the graduate capabilities.

On successful completion of this unit, students should be able to:

LO1 - demonstrate how financial modelling can mitigate risks by employing principles of subsidiarity in the decision-making process. (GA5, GA6) 

LO2  - demonstrate proficiency in the use of spreadsheet manipulation and control. (GA5, GA10) 

LO3  - measure, interpret and compare financial and nonfinancial risks (GA5, GA8) 

LO4 -  analyse and evaluate potential risk in projects, forecasts or portfolios. (GA5, GA9) 

LO5 - design and implement effective spreadsheet based financial models. (GA5, GA7) 

Graduate attributes

GA5 - demonstrate values, knowledge, skills and attitudes appropriate to the discipline and/or profession 

GA6 - solve problems in a variety of settings taking local and international perspectives into account

GA7 - work both autonomously and collaboratively 

GA8 - locate, organise, analyse, synthesise and evaluate information 

GA9 - demonstrate effective communication in oral and written English language and visual media 

GA10 - utilise information and communication and other relevant technologies effectively.

Content

Topics will include: 

• Model design and architecture 
• Subsidiarity in the decision-making process 
• Building the model 
• Financial statement modelling 
• Portfolio modelling 
• Sensitivity and scenario analysis 
• Checking and debugging 
• Simulations 
• Optimisation techniques 
• Risk analysis 
• Presentation of models 

Learning and teaching strategy and rationale

The teaching and learning strategy is built on a “student-focused approach,” which can be described as “Level 3. Focus: what the student does” instead of a “teacher-focused approach,” ACU’s teaching policy focuses on learning outcomes for students. Our teaching aims to engage students as active participants in the learning process while acknowledging that all learning must involve a complex interplay of active and receptive processes, the constructing of meaning for oneself, and learning from others. ACU promotes and facilitates learning that is autonomous and self-motivated, is characterised by the individual taking satisfaction in the mastering of content and skills and is critical, looking beneath the surface level of information for the meaning and significance of what is being studied. 

The schedule of the workshop is designed in such a way that students can achieve intended learning outcomes sequentially. Teaching and learning activities will apply the experiential learning model, which encourages students to apply higher order thinking. The unit ensures that learning activities involve real-world scenarios that in turn assist with ‘real-world’ preparedness. The unit also uses a scaffolding technique that builds a student’s skills and prepares them for the next phase of the learning process.  

Mode of delivery: This unit is offered in different modes. These are: “Attendance” mode, “Intensive” mode and “Online” mode. This unit is offered in three modes to cater to the learning needs and preferences of a range of participants and maximise effective participation for isolated and/or marginalised groups.  

Attendance Mode 

In a weekly attendance mode, students require face-to-face attendance in specific physical location/s. Students will have face-to-face interactions with lecturer(s) to further their achievement of the learning outcomes. This unit is structured with required upfront preparation before workshops, most students report that they spend an average of one hour preparing before the workshop and one or more hours after the workshop practicing and revising what was covered. The online learning platforms used in this unit provide multiple forms of preparatory and practice opportunities for you to prepare and revise. 

Intensive Mode 

In an intensive mode, students require face-to-face attendance in weekend or any block of time determined by the school. Students will have face-to-face interactions with lecturer(s) to further their achievement of the learning outcomes. This unit is structured with required upfront preparation before workshops. The online learning platforms used in this unit provide multiple forms of preparatory and practice opportunities for you to prepare and revise.  

Online Mode 

This unit uses an active learning approach to support students in the exploration of the essential knowledge associated with corporate finance. Students can explore the essential knowledge underpinning corporate and develop knowledge in a series of online interactive lessons and modules. Students are given the opportunity to attend facilitated synchronous online seminar classes with other students and participate in the construction and synthesis of knowledge, while developing their knowledge of corporate finance. Students are required to participate in a series of online interactive workshops which include activities, knowledge checks, discussion and interactive sessions. This approach allows flexibility for students and facilitates learning and participation for students with a preference for virtual learning. 

Assessment strategy and rationale

Assessments are used primarily to foster learning. ACU adopts a constructivist approach to learning which seeks alignment between the fundamental purpose of each unit, the learning outcomes, teaching and learning strategy, assessment and the learning environment. In order to pass this unit, you are required to achieve an overall score of at least 50%. Using constructive alignment, the assessment tasks are designed for you to demonstrate your achievement of each learning outcome.  

Overview of assessments

Attendance mode ;

Intensive mode 

Online mode 

Representative texts and references

Prescribed Textbook: 

Fairhurst, D. (2015), Using Excel for business analysis: A guide to financial modelling fundamentals, Wiley. 

Recommended references 

Benninga, S. (2014), Financial Modeling, 4th edn, MIT Press 

Day, A. (2013), Mastering financial modelling in Microsoft Excel, 3rd edn, Pearson UK