Professional Financial Modeller (PFM) is professional certification program which awards PFM designation for those who have attended preparation class and pass a full day single level exam. The curriculum covers the field of financial model, which deals with forecasting the future of financial condition pertaining to a company or project, preparing projection on company finances, equity and project valuation, feasibility analysis and risk analysis.
PFM preparation and examination is a highly interactive program designed to deliver practical understanding on effective financial modelling. The program covers many subject areas and and through real-life case studies, the emphasis will be on practical approaches.
PFM Curriculum embeds new concepts and models which are not delivered in other modelling classes where some concepts are proprietary to PFM Program.
PFM has adopted Sustainable Financial Modelling principles to ensure that a model developed has reasonable and adequate basis on model preparation process with emphasis on model reasonableness in the long run.
The Body of Knowledge of the Program has been carefully developed in order to equip participants with techniques to improve the quality of financial model that he/she produces. The aim of the goal is to enable participants to prepare complex financial model by using Excel. Hence, this program is practice intensive and can be directly implemented in day to day work.
The curriculum covers topics based on five basic pillars:
1. Forecasting Techniques: predicting assumptions by using time series statistics. The forecasting methods used are linear and non-linear models. There will be session on how to develop Monte Carlo Model by using Excel.
2. Financial Projection: preparing future financial statements of a company. Covers complex topics such as modelling production and trading Cost of Goods Sold and Inventories, Modelling projects with Interest During Construction, Modelling FX Gain Loss, Continuous Capex and Continuous Loans, Modelling Intangibles, Estimating Working Capital. Discuss about consolidation on the projection of a group of companies.
3. Corporate and Project Valuation: by using 6 internationally recognized valuation methods, PFM Program will enable you to value company by using various methods and understand the strength and weakness of each model. The capability to employ those models on realistic setting will enable you to have many valuation arsenals which will help you find the more accurate valuation.
Those models are:
a. Discounted Cash Flows
b. Enterprise Value Based Discounted Cash Flow
c. Dividend Discount Model
d. Residual Income
e. Enterprise Value Multiples
f. Price Multiples
The discounted based valuation can be conducted by using single or multiple interest rates.
4. Risk Analysis: consists of Sensitivity Analysis and Scenario Analysis by using methods such as: various types of Ratios, various types of Duration, Assumption Sensitivities and many others. Participant will also learn to develop risk analysis (including Probability of Default) from Monte Carlo based model.
5. Project Modelling and Analysis: Helping you understand how to model a project and conduct various feasibility analysis tools. Discuss about weaknesses in popular tools such as Net Present Value and how it can be gamed to have an artificially feasible project. There will also be discussion about NPV and IRR Sensitivity for project risk analysis.
PFM curriculum is built in line with Chartered Financial Analyst (CFA) and Financial Risk Model (FRM) PFM Curriculum. Hence, for participants who are enthusiasts of those programs, PFM curriculum will provide strong practical understanding on how to apply the concepts taught in those programs and increase the probability of passing exams in those programs.
PFM Program consists of 4 day training session and 1 whole day exam consists of two exams:
1. Multiple Choice Exam
2. Computer Practice Exam by Using Excel
In order to obtain PFM Designation, you need to pass both exams.
PFM program is developed based on thorough study to find the best method to predict the future of a company or project. Some applicable proprietary methods which are not or rarely taught in modelling classes elsewhere are also part of the curriculum,
- Discounted Cash Flow and other discounted based valuation models by using multiple interest rates
- Conducting NPV and other feasibility analyses by using multiple discount rates
- Modelling Delta ratios
- Equity Duration, Cross Duration Matrix and Assumption Sensitivity risk analysis
- Company and project valuation connectivity with other asset classes (bonds, forex, derivatives) by using financial model
- NPV Resurface and NPV sensitivity to measure the risk of project demise