Unit Code: BFN313

Unit Title: FINANCIAL MODELLING AND FORECASTING

Program(s): BAF
Lecturer Name: JAMES MINCHA
Lecturer Contacts: James.mincha@zetech.ac.ke 0715216162
Consultation time Friday 1040 hrs to 1340 hrs
F-7-16

UNIT PURPOSE/DESCRIPTION
The purpose of this course is to introduce the tools utilised in financial modelling and forecasting,
identifying and setting parameters of financial statement.
EXPECTED LEARNING OUTCOMES
By the end of the course the student should be able to:
1. Explain the terms financial modeling and forecasting
2. Describe methods and tools used in financial forecasting
3. Apply the methods and tools in financial modeling and forecasting
4. Apply computer packages in financial forecasting
FINANCIAL MODELLING AND FORECASTING COURSE OUTLINE

Week Topic Sub-topic

Week 1 Orientation Orientation

Week 2 Financial modeling and  Introduction to financial modeling and

forecasting forecasting
 Areas of application of Financial Models
Week 3 Types of financial models  How to Build a Financial Model
 Types of financial models

Week 4 Time Series Analysis  Importance of Time Series Analysis

 Models for Analysis of time series

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Week 5 Regression Analysis  Regression equations
 Regression Analysis
Assignment 1

Week 6 Vertical & horizontal relationship  Vertical analysis of Income Statement

of financial statements (Common  Common size analysis to the Balance Sheet and
size analysis) Income Statement
Week 7 CAT 1 Writing Continuous Assessment Test 1

Week 8 Capital Asset Pricing Model and  Assumptions of Capital Asset Pricing Model
Arbitrary Pricing theory  Costs of Capital or Required rate of return
 Characteristics of Arbitrage Pricing Model

Week 9 Financial forecasting & cash  Percentage Sales Method

budgeting  Financial requirement during Forecasting
Period
 Role of Cash Budget
Assignment 2
Week 10 Cash flow projection  Cash flow Budget
 Integrated Financial Statements
Week 11 Application of computer  Economic Analysis and Forecasting
packages in financial forecasting  Multiple Quantitative Forecasting Methods

Week 12 CAT 2 Writing Continuous Assessment Test 2

Week 13 REVISION REVISION

Week 14 & 15 FINAL EXAMINATION FINAL EXAMINATION

TEACHING/LEARNING METHODOLOGY
The course will be taught mainly through lectures, tutorials, group discussions and student
presentations.

ASSESSMENT CRITERIA

Assessment Type Frequency Percentage

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 Assignment 2 10%
CATs 2 20%
Final Examination 1 70%
Total 100%

Core Reading Material

1. Jae K. Shim, Joel G. Siegel (2005), Handbook of financial analysis, forecasting and modeling,
2. Box, G.E.P, Jenkins, GM and Reinsel, GC (2003). Time Series Analysis; Forecasting and Control – 5th
edition – Delhi; Pearson Education,.
3. Hanke, JE, Reitsch, Arthur G. & Wichern, Dean W (2003). Business Forecasting - 7th edition – New
Delhi; Prentice Hall,.
4. Davis, Steven I (2002). Investment Banking – London: Palgrave Macmillan,

Recommended Text Books for further Reading:

1. Carol Alexander (2008) , Practical Financial Econometrics (Series - Market Risk Analysis), John
Wiley & Sons Inc
2. Peiji Wang (2003), Financial Econometrics: Methods and Models, Routledge
3. Peter Christoffersen, (2003), Elements of Financial Risk Management Academic Press
4. Journal of Financial Economics
5. International Journal of Intelligent Systems in Accounting, Finance & Management

Approval for circulation by:

Unit Lecturer name: JAMES MINCHA …………….. Signature: ………J.M…………….

HoD’s Name: Henry Kiogora…………………… Signature: ……………………..

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