Financial modelling Level One

Question 1

Tell me about the main financial modelling software packages you are aware of.

Question 2

What is a financial model?

Question 3

What are the pros and cons of a particular piece of software you have used?

Question 4

Why may software be beneficial over Excel for modelling?

Question 5

Why is it important to clearly identify inputs/outputs/unit types?

Question 6

Why is locking cells important?

Question 7

What is sensitivity analysis and why is it important?

Question 8

What issues can arise with modelling spreadsheets/packages?

Question 9

What are the limitations of modelling software/Excel?

Question 10

How can you overcome these?

Question 11

How do you ensure that formulas and mechanics are working correctly?

Question 12

How do you ensure that the figures are not a false pretence?

Question 13

How do you check the reliability and accuracy of data?

Question 14

Why are explicit valuation approaches popular?

Question 15

Did the economic crisis impact the type of financial modelling carried out by investors and developers?

Question 16

What is discounting?

Question 17

What is the time value of money and why is it important?

Question 18

What is compounding?

Question 19

Tell me about an assumption you might make in a financial model.

Question 20

Are you aware of any RICS guidance relating to financial modelling?

Question 21

What accounting concepts have you come across in relation to financial modelling?

Question 22

What is CAPEX?

Question 23

Tell me about the key elements of RICS DCF for Commercial Property Investments.

Question 24

How can a DCF be used to assess worth/investment value?

Question 25

Tell me about how you would arrive at a discount rate in a model.

Question 26

What factors affect the discount rate?

Question 27

How do you avoid double counting risk in both the cash flow and discount rate?

Question 28

What does the exit value reflect?

Question 29

How do you establish exit value?

Question 30

What information do you need to prepare a model/DCF?

Question 31

What tenure/physical attribute/lease/rental value/costs of ownership/holding costs/refurbishment/redevelopment/finance/gearing/taxation information would you need and why?

Question 32

How would you factor these into your model?

Question 33

When would you use current / forecast data?

Question 34

What are the issues around forecasted data?

Question 35

What period would you use for a cashflow?

Question 36

What is the impact of a shorter time horizon on value?

Question 37

Would you factor tax into a DCF?

Question 38

How would this differ from a Market Value assessment?

Question 39

How would you assess rental growth and reflect this in the DCF?

Question 40

What is IRR?

Question 41

How do you calculate IRR?

Question 42

What is TWRR?

Question 43

How do you reflect cash flow frequency in a model?

Question 44

What is a property risk premium?

Question 45

How do you assess the risk free rate?

Question 46

What are examples of market / specific risks?

Question 47

What are other ways of determining TRR?

Question 48

What is the CAPM?

Question 49

Tell me about your understanding of RICS Financial Viability in Planning and how this relates to your financial modelling work.

Question 50

What inputs would you include within this type of model?