# 1. Introduction to Financial Modelling

## 1.1 – Unusual approach

We are all living in a very uncertain and unprecedented time. Covid 2nd wave has been brutally devastating and has caused a lot of pain and misery to humanity. I hope you are your family are staying safe. Please double mask if you really have to step out. I hope humanity does not have to face this situation ever again, and we get out of this situation as quickly as possible.

Let me start this module on Financial Modelling with an apology. I know this module was due for a while now. I know, I’ve taken a lot of time to get started on this. There were multiple reasons for the delay, but that’s all behind now. Here we are, all set. I’m super excited to deliver this module, and I hope you are excited as well 😊

But there are a few things to note before we get started –

Financial modelling as a subject is taught either in the classroom or in a  video format. There is a reason for this – while teaching this subject, at any given point, we tend to open up multiple threads and then tie it all together in the end. So in a sense, there are hops, jumps, crisscrossing, and a bit of number juggling. Given the nature of this subject, it makes sense to teach this online or via a physical classroom setup.

Think of it as producing a movie. I’m sure you understand that a movie is not shot scene after scene in a sequential manner. Different scenes are shot, songs are recorded, action scenes are shot, edited, and then patched together and eventually made to look like the entire movie was show scene after scene.

In a sense, financial modelling is very similar.  You will understand this better as we dig deeper.

I don’t know if financial modelling is taught in the classic article format. I could make a huge mistake attempting this task, but I think it is worth the shot.

As I just hinted above, the learning won’t be sequential. We will have multiple threads open; numbers will crisscross and move from one sheet to another, adding to the non-sequential learning format. But that’s the way this will go, so please be prepared for it.

As we progress through, you will realise that Financial Modelling is more of an art form than financial science. We throw in a ton of assumptions while building any financial model. The assumptions may vary from person to person based on the individual’s experience.

However, the good part is that the model we create will very easily accommodate changes and updates; this flexibility makes financial modelling a beautiful endeavour.

## 1.2 – What are you learning and why?

Perhaps an essential question – what is ‘Integrated Financial Modelling’, and why do we need to learn this?

Think about a typical company; as you can imagine, the company can have several moving parts. For example, a manufacturing company can have a team procuring raw materials, workforce to manufacture goods, admin team, finance team, regulators, compliance, marketing, supply chain, distribution, R&D, and whatnot.

Given the enormity, how do you break a company down into smaller parts and gain meaningful insights into its functioning?  How do we gauge its efficiency?

Well, this is where financial modelling comes into play. Eventually, whatever the company does, it all boils down to numbers and metrics.

For example, successful operations lead to revenue generation, successful cost management leads to operating profits. Good financial practice leads to manageable debt levels; good supply chain management leads to better inventory management. Good dividend policy strikes a balance between a company’s growth and shareholder value. So on and so forth.

So the approach we take here is that if we can systematically analyze the numbers presented in the financial statements, perhaps it opens up a window to understand the company better.

When I talk about understanding financial statements, I’m talking about getting into granular details; we go line by line. Many often assume that a series of simple financial ratio analysis results in great insights into the company. Yes, to some extent, it does, but we can do a lot more to better understand the company.

Better understanding leads us to a better insightful investment decision.

Think about Financial modelling as a systematic way to understand the company. Here is what the name, ‘Integrated Financial Modelling’, means –

Financial = Indicates that we are working with the company’s financial statements

Modelling = Indicates that we are laying down a company’s financials systematically, connecting these financial statements and subjecting the same to a bunch of equations. The entire thing tied together is called a model,  a model with specific input (financial statements) and a specific output (valuations).

Integrated = Implies that all the numbers are interconnected, and no part of the financial model is isolated. You will understand this better as we progress through building the financial model.

The end objective of any financial model is to help you build a perspective of valuation. The final output of the financial models is the company’s share price after factoring in everything that matters. You take the share price from the model, compare the share price against the market share price, and figure if the stock is fairly valued, undervalued, or overvalued.

The ultimate satisfaction is when you know that the stock is undervalued and available for a throwaway price in the market, trust me on that 😊

## 1.3 – Tools of the craft

Let me break the ‘not so good news’ first – to learn, build, and benefit from a financial model; it is mandatory to have some background knowledge about the following –

• How to read an annual report
• How to read the financial statements of the company – Balance Sheet, P&L, Cash Flow
• It would be best if you were comfortable working with MS Excel or any other software similar to MS Excel

The good part is that you can learn how to read the annual report, Balance sheet, P&L, and Cash flow in the fundamental analysis module.

Unfortunately, we don’t have a module on MS Excel, so please try and self-study MS Excel. If you are uncomfortable with any of the three topics mentioned above, please stop right now and learn these things before learning Financial Modelling.

Please do note, when I say you need to know how to read financial statements, I only mean that you need to know this from a user’s perspective. As long as you know the basics, that is good enough.

The same goes with Excel. It would help if you were good enough with essential functions and formats. I don’t expect you to have the knowledge required to build a complicated dashboard on excel.

The good news is that when I decided to learn Financial Modelling, I had no clue about the three things I mentioned above. I had to learn these things first and then get back to financial modelling. If a person like me can do this, then I’m confident anyone can.

By the way, financial modelling as a concept can be applied to any part of market finance, be it investing or derivatives trading. Financial modelling is nothing but a structured way of thinking through a complex problem; some even call this ‘Design thinking’ of sorts.

If you are a regular reader of Varsity, we have dabbled with Financial Modelling in the module related to Risk management and in the Trading systems module. It’s just that we never called it ‘Financial Modelling’.

This module, however, will be focused on Fundamentals and Financial Modelling for investments.

## 1.4 – The steps involved

At this point, I’d like to share with you a brief overview of the steps involved in creating an integrated financial model. These steps only give you a sense of direction. We will dig deeper into each of these steps as we proceed.

These are the steps involved in building a financial model –

Set up a layout – Perhaps the most crucial aspect of financial modelling. I foresee myself stressing on this several times throughout this module, so bear with me.  A typical Financial model will have multiple excel sheets within a single workbook. We need to ensure our Excel workbook is appropriately indexed and formatted and the format stays consistent across the entire model.

For example, if I’m dealing with 2018 data in column ‘E’ of my excel sheet, I’ll ensure that column E across all the other sheets will always deal with 2018 data. Or here is another example of the layout, column A and B will be shrunk to ensure easy indexation across all the sheets.

At this point, this may come across as a bunch of vague statements, but you will appreciate these points as we progress along.

Historical Data – A rather painful task, but this need to be done. We need to download the Annual report of the company we are dealing with, preferably for the last five years. We need to extract the balance sheet and P&L data from the annual report and input this in our excel sheet. Of course, we will be dealing with consolidated numbers here and not standalone data.

Most importantly, please use the annual report as your primary data source and not any other 3rd party data vendors.

Assumption Sheet – Remember I spoke about financial modelling as an art form rather than financial science? Well, we create an assumption sheet and dump all our assumptions in one sheet here. We assume things about the company should be close to reality; the further we go from reality,  the more distorted our model gets. Let me give you an example.

Suppose a company’s revenue is growing at 7% year on year for the last five years; what do you think will be the growth rate for the 6th year? If we have to assume something, it has to be in the region of 7%, unless you foresee a significant change. Anything higher or lower will distort the P&L from reality.

Asset and other schedules –Throughout the model, we create something called a ‘schedule’. We create a schedule with oversized line items. For example, the asset schedule deals with plants, machinery, and all the company’s fixed assets. We lay down the numbers in a systematic way and deal with them. For example, we extract the gross block number, depreciation, netblock, and even the CAPEX figures in the asset schedule.

So a single schedule gives us insights into multiple aspects of the company.

Like the asset schedule, we create other schedules such as – reserves schedule and the debt schedule.

Projections – Once the assumptions are complete and the schedules, we project the balance sheet and P&L for either 3 or 5 years forward. This is one of the crucial steps while building the model.

Cashflow derivation – Again, a very crucial step in financial modelling. In this step, we derive the cash flow statement using the P&L and Balance sheet data, called the ‘indirect method’, of cash flow preparation. Note, unlike the Balance sheet and P&L data, historical data of cash flow is not extracted from the annual report but instead derived. This step can be tricky; it sometimes works and sometimes does not work due to its complexity.

Hence we will also look at alternatives here.

Ratios – Once all the data is in place, we can quickly draw up ratios and charts for our model. The ratio sheet will include things like liquidity, solvency, profitability ratios etc.

Valuations – In the valuation sheet, we deploy the discounted cash flow method of valuation and finally value the company. Think of this step as including a model within a model. Of course, we will have sufficient checks and balances in places to ensure we are not going way off the mark, and even if we do, the sensitivity tables that we develop should help us get back on track.

These are roughly the steps involved in developing a full-fledged integrated financial model. While it makes it seem simple, trust me, it is not.

I’m excited to dig deeper. I hope you are too, so buckle up for the ride 😊

### Key takeaways from this chapter

• A financial model takes in inputs in the form of financial statements and gives us an output mainly in terms of valuations
• Financial modelling involves a non-sequential learning path
• Multiple discussion threads open up while building a financial model
• Basic working knowledge of MS Excel, Balance Sheet, P&L, cashflow is mandatory before venturing into financial modelling
• There are 7-8 steps to follow while building a financial model
• The model that we build has to be flexible to accommodate changes and updates.

1. Sundeep says:

Sir finally the module is here and I am super excited as well.
I am starting to think this might be your most personal module yet.
Anyways sir. Looking forward to more modules soon. \

Thank you.

• Karthik Rangappa says:

All modules are personal to me, Sundeep 🙂

2. Vishal puri says:

I like this varsity initiative it’s much more usefull then expensive financial books and easy to understand

• Karthik Rangappa says:

Good luck and happy reading, Vishal 🙂

3. Yerra V S N Sai Sudheer says:

Game on!!!!

• Karthik Rangappa says:

Yes Sir!

4. kinshuk jain says:

5. Sidharth says:

Excited to learn this. Hopefully this will make me a better investor.

• Karthik Rangappa says:

Hopefully it should help 🙂

6. Viswanathan Viswanathan says:

Dear sir
Me too interested in your modules, already I am going through varsity.

• Karthik Rangappa says:

7. Harish says:

Super excited to learn from zerodha varsity. Thanks to you and your team.

• Karthik Rangappa says:

Good luck, Harish!

8. Vaishnavi says:

Your writeups are easy to grasp. Thank you for the module 🙂

• Karthik Rangappa says:

Happy to note that, Vaishnavi. Good luck and happy reading 🙂

9. Aman Thakur says:

Well sir, hats off to you s….you made our day.. especially for those who all are daily go through varsity for new stuff…sir I am core Marine engineer deals with big engines in the ocean ..but I have been following you and varsity for last three years and you mould me like that I can deal with financial aspects that are required for investment . I only want to say that best teacher teaches from heart not from books..and you are best………….god bless you sir.

• Karthik Rangappa says:

Thanks for the super kind words, Aman. Encouraging words like these keeps us going 🙂

10. Shreyansh Mehta says:

Looking forward for the module. Will help thoroughly in personal business as well as in fundamental analysis

• Karthik Rangappa says:

Absolutely!

11. Sunny says:

Thankyou so much sir, for initiating the great Module again.
I’m Ready to witness again simplest explanation of complex Topic.

• Karthik Rangappa says:

Hope it wont be disappointing 🙂

12. Alok Gupta says:

Thankyou so much sir. This module will be a game changer in my journey of investing. Thanks again.

I would really like to know the exact date of releasing of this module. Also whether it will be released chapter wise or all at once?

• Karthik Rangappa says:

It will be released chapter by chapter, Alok.

13. Shubham Horambe says:

Hope to learn a lot from this module. Thankyou Karthik

• Karthik Rangappa says:

I hope it delivers value!

14. RAMANATHAN SESHAN says:

Thank u sir.
What is the periodicity of aticles

• Karthik Rangappa says:

As and when I finish a chapter, I’ll upload it. Unfortunately, I cannot place a timeline for this.

15. J. Scott says:

I really am embazaled by your think-topic. Please write something about excel sheet and how companies are using excel sheet to make their p&l statement.

• Karthik Rangappa says:

Not sure if I can include a module on Excel, Scott.

16. Arpit says:

Hi Team, Somehow this module in not available in the Android app. It still shows as ‘Coming Soon’. I like to track my reading progress so it would be great to see this module in the app as well.

• Karthik Rangappa says:

We just started this module, once the module is complete it will be updated on the app.

17. sandesh shetty says:

Hi Karthik,

Looking forward to digging deeper into this module. Once again, thank you for all your effort.

Anyway, may I know the frequency of new posts for this module? Is it weekly one post? Also, how many chapters will this module contain?

Thanks
Sandesh Shetty

• Karthik Rangappa says:

The chapter will be updated as soon as I finish writing the same, unfortunately its hard to put a time line to this 🙂

18. Cv ratnababu says:

• Karthik Rangappa says:

Yes, will be updating the content as and when the chapter is ready.

Thanks Karthik, this is very helpful.

• Karthik Rangappa says:

Good luck, Shiv!

20. SS says:

Any knowledge is good knowledge if you get benefited from it in any manner 🙏🙏

• Karthik Rangappa says:

True 🙂

21. Nitin Acharya says:

Mr Rangappa, waiting eagerly for the rest of the modules.

• Karthik Rangappa says:

Sure Nitin, the chapters will be updated as soon as I finish writing the same, unfortunately, its hard to put a timeline to this

22. Jayant Sharma says:

Hi Karthik,

Tbh, I was trying to build the model on my own for the last few days and failing badly.
Now that I have you as an expert, I am sure it will get built just fine.
Thank you for sharing your knowledge with the rest of us.
Appreciate it!

• Karthik Rangappa says:

I hope I wont disappoint you 🙂

23. Abhay says:

Finally you posted this .👌👌👌very well explained

• Karthik Rangappa says:

24. Vinay says:

Zerodha Has to be the Best broker in terms of Everything. They connect to their customers and are not Money oriented as per my experience. This has to be the best and Easy to understand course on the Stock markets and Finance that too free of cost. A big thanks to you @KarthikRangappa and Other members of Zerodha for being a customer centric business

• Karthik Rangappa says:

Thanks for the kind words, Vinay. Hope you enjoy reading this module 🙂

25. A Uday Bhaskar S Murthy says:

Whatever the model introduced by Zerodha will be professional and easy to understand even to non domain persons . Eagerly looking forward for this module.
Tq

• Karthik Rangappa says:

I hope we can keep up to that reputation with this module 🙂

26. Deepak Jha says:

I think Varsity will soon become university in itself…..after this module….all money minting courses will shut down to some extent…..

• Karthik Rangappa says:

27. Chhatra Ram says:

Thank you so much Kartik sir, Nitin sir, and whole team

I like so much zerodha because of their founders. Zerodha is a customer centric business, they are not money oriented people as per my understanding.

• Karthik Rangappa says:

Thanks for the kind words, we try to do our best and help our customers in whichever way possible. I hope you continue to enjoy reading this module.

28. Hamzu says:

I’m extremely excited about this module. The only free resource on the internet I value more than paid resources. Thanks, Sir.

• Karthik Rangappa says:

Happy to note that, Hamzu!

29. Vibhore Gupta says:

I am doing a separate course on financial modelling however after getting to know that you’re bringing this module I’m really excited to read it asap.

• Karthik Rangappa says:

Where are you doing the course, Vibhore? I hope you’ll like the content here.

30. Anant says:

Thank You so much for this module. Will be able to learn Financial Modelling in a different way.

• Karthik Rangappa says:

I hope you’ll like the module 🙂

31. Smita says:

HOT!!!

32. Maria says:

Hey Kartik,
Which one is better trading or investing in derivative market(option or future)….

• Karthik Rangappa says:

A lot of investing and a bit of trading 🙂

33. Yash Rastogi says:

That’s the module I was waiting for.
Thank u so much sir🙏

• Karthik Rangappa says:

Happy learning, Yash!

34. Grishma Garg says:

When will the next chapter be uploaded?

• Karthik Rangappa says:

Hopefully in the next 10-12 days.

35. Shubham Jain says:

I don’t see any module in varsity w
Of financial modeling.. please guide.also tge coming soon module is module no 12..Where is module no.11

• Karthik Rangappa says:

These modules are not yet updated on the app.

36. Mandira Rakshit says:

Hope you and your family members are safe in this pandemic situation. I would like to thank you from bottom of my heart for organizing those wonderful modules. Hats off Sir..

• Karthik Rangappa says:

Thanks so much Mandira. Yes, my family is keeping safe. I hope the same with yours 🙂

37. Shikhar says:

Thank you so much for everything sir. Way excited for this one.

• Karthik Rangappa says:

Thanks, Shikhar. Hope it lives up to the expectations.

38. Arvind Charan says:

Hello sir,
I am a very new investor in my mid-twenties and just like thousands others, I have also started investing in stock markets in the lock down. I am yet to go through all of your literature. [completed five :)]. I just want to say that your content is a gold mine, along with occasional ‘investopedia’. Hence I would like to thank you, very much.
Also why haven’t Varsity made any videos? I believe they maybe helpful too. Just saying, not criticizing ;). Good luck sir, and thank you.

• Karthik Rangappa says:

Thanks for the kind words, Arvind. The only reason for not venturing into videos is the format. I like to explain things in a long format, this ensures that I don’t leave any details out. Videos cant be that length, it not just bores the viewer but also costs a lot to produce. However, that said, we are looking into what we could do about that 🙂

39. Kallol Sen says:

Sir, I can’t wait, I am eagerly waiting for your next content, I am learning Stock Market from versity since 2.5 years and able to implement those concept, as a result it gives huge differences. A little bit suggestions from my side is that, if you dig more on microeconomics from RBI website and show us how to use those data then it would be additional beneficiary for us.

• Karthik Rangappa says:

Thanks for that, Kallol. Yes, I’d like to do that as well. Maybe in the next module on Personal finance.

40. RAVI RAJA says:

I am so excited and can’t wait to complete this module as well. You are amazing Karthik Rangappa. Cheers to learning with Zerodha Varsity.

• Karthik Rangappa says:

Happy learning, Ravi!

41. Arun says:

Hello

can you tell me what’s your thought process behind not using data from other sources. It is very much required to go through annual statement while valuation for proper projection but what’s the drawback of taking annual statement data from other sources(Like exchanges,refinitive,Bloomberg,prowees iq etc.). Sir another thing i am little bit confused when to take consolidated and when to take standalone as sometime some analyst take into consideration standalone(if standalone operation is the major revenue driver).

Another request – sir i commented several thing in several sections and you replied to that also precisely. But finding that and clarifying my doubt is quite difficult as searching is also quite difficult. Can you assign login id and password so that we can track our progress and doubt. And if needed attach some notes also.

• Karthik Rangappa says:

Arun, a financial model is riddled with assumptions. So given this, you don’t want the data to come from 3rd party sources which may have modified to fit a certain format, which may have other assumption. So to keep it clean, use the data from the AR. Besides, taking data from AR also means that you’d be reading the notes, which has valuable information.

I’d always use consolidated data, I never really use the standalone data Arun.

About the comments, I know this is an issue, I’ll see what best I can do.

42. Jay shudra says:

I like the zerodha effort to increase the financial literacy. The explanation given in all modules are lucid and clear. I would like to say thanks to sir Karthik for sharing the valuable knowledge.

• Karthik Rangappa says:

Happy learning, Jay!

43. Manish Kumar says:

Excited for this one

• Karthik Rangappa says:

So are we 🙂

44. Shirish Nayak says:

So excited to start reading this series. Have you planned on how many chapters you are trying to make in this series? Thank you so much for all the valuable information which you have been providing since years 🙂

• Karthik Rangappa says:

No plan as such, Shirish. I’ll take it as it goes 🙂

45. Arvind bharati says:

When will you introduce complit financial modeling and algorithm trading ?

• Karthik Rangappa says:

Financial Modelling yes, Algo trading, no.

46. Rajnish Chandan says:

Sir,

I would like to thank you for creating such a useful content , it’s very good initiative for students/new traders/all in general to get market in-depth knowledge from your pdf (module).

Thanks,
Rajnish

• Karthik Rangappa says:

Happy learning, Rajnish!

47. Praband says:

Why this module didn’t included in varsity app yet ?

• Karthik Rangappa says:

We have just started this module, it will come on the app when its fully done.

Hearty Thanks for bringing this with so much clarity again. This will definitely bring more clarity and enthusiasm.

• Karthik Rangappa says:

Cheers!

49. sanjay says:

the way you are helping retail trader/investor much appreciated sir. God bless you and your team sir.

• Karthik Rangappa says:

Thanks for the kind words, Sanjay!

when we will get all the content on the chapter?

• Karthik Rangappa says:

I’ve write these chapters one after the other 🙂

51. Siva says:

Very exited on reading the Introduction and most exited for its further chapters. Thank you for this wonderful efforts.

• Karthik Rangappa says:

52. Mohit Jain says:

Thank you so much sir for starting this module:) truely grateful to you and team zerodha for spreading financial knowledge in a simplified manner!
The formula for FCFF(starting from net income) is- Net income + Depreciation+/- Working capital changes+ Interest*(1- tax rate) +/- Capex invesments
So, in the capex part do we have to subtract out the depreciation here or we should include the capex without depreciation?

• Karthik Rangappa says:

Mohit, yes, you need to deduct the CAPEX. I’ll discuss this more as we move ahead 🙂

53. Devojeet Barick says:

finally the beast is here.. just curious to ask will be detailed how to do financial modelling.

• Karthik Rangappa says:

I hope to cover a basic model in detail 🙂

54. Praveen says:

Hi Karthik,
All your varsity work is truly commendable. Keep up the excellent work. I am sure the goodwill you are earning here from folks reading your stuff far surpasses any fat salaries or insane trading profits you ever will make.

• Karthik Rangappa says:

Thanks, Praveen. I hope the goodwill part turns true 🙂

55. Kallol Sen says:

Sir, if any help needed for publishing documents for next chapters, you are requested free to tell, I am interested to put my effort and will be wholehearted for helping you and versity readers. I am in learning stage and it will enrich my knowledge as well.

• Karthik Rangappa says:

Thanks, Kallol. I’ll certainly keep that in mind 🙂

56. Altamash says:

I am a derivatives trader and investor myself. To anyone’s whos asked me on how they should get started with markets, I have suggested all of them to come to Varsity. Reading here is like a story, never gets boring. Thanks for the initiative.

• Karthik Rangappa says:

Happy to note that and thanks for letting me know 🙂

57. Divyaleela says:

one of the best and easiest explanations I have ever seen.
Thank you very much, sir.

• Karthik Rangappa says:

58. Shweta says:

Your writing is lucid and to-the-point for any layperson to understand such an arcane topic.
Congratulations on that 🙂 I am thoroughly enjoying studying about Investments.
However, I was just wondering why are the current modules not reflected in the Varsity app (Android)? I checked for updates on PlayStore but I am using the updated version of the app.
Also, there is a slight change of language which I observed… The content is more or less the same, but a little more content is found on the Desktop site.
Any particular reason Sir? Also, should I refer the Desktop site for future use?
Thanking you in anticipation.
Again, great job with the content 😀
Best regards 🙂

• Karthik Rangappa says:

Thanks for the kind words, Shweta. Yes, the app is lagging the desktop in terms of the availability of content. The thing is each module in the app has several illustrations. This takes time to put up. Hence the delay. Eventually, everything on the desktop will be made available on the app. We are currently working on making the personal finance module live on the app. Content quality wise, its the same 🙂

59. Shweta says:

Thank you so much for your reply sir 😀 I will primarily use the app for now then, and just check the desktop for any updates and the discussions in comments related to that particular topic. 😀 Thanks again 😀 Have a great day ahead 🙂

• Karthik Rangappa says:

Sure, good luck Shweta 🙂

60. Arvind bharati says:

Sir,how many probable cheapter we can guess for this financial modeling ? I heared that modeling made mostly in excel rather theory,is that right ?

• Karthik Rangappa says:

I don’t know how many more chapters, but yes, this is mostly based on excel.

61. Shrikanth Kulkarni says:

Thanks Karthik for this wonderful platform. Zerodha is doing a tremendous job to help us learn without any additional cost. Really excited to learn this new module from you.

• Karthik Rangappa says:

Happy learning, Shrikanth!

62. Sourabh Arora says:

When will upcoming chapters be published?

• Karthik Rangappa says:

Will try to upload a chapter this week.

63. Sarvesh says:

64. Ashish says:

Super work Karthik

• Karthik Rangappa says:

65. Kumar Rahul says:

This is such a great chapter. I am also learning data science. I hope both of them come together and my interest in finance multiplies. Thank you for taking your time and putting your efforts for all of us. I just hope we deserve it.

• Karthik Rangappa says:

I hope so too, Kumar. Good luck!

66. Chandu says:

Worth waiting for this one!
Thank you,Karthik Sir
Grateful to you.

• Karthik Rangappa says:

67. Arvind bharati says:

Dear sir in this module where to read/get catogory and sector and company wise case study ?

• Karthik Rangappa says:

We have not done that yet. We will do that eventually.

68. Ganesh Patel says:

Ohh..wow.
Sounds likes very important moduleis getting started. I will go back and first revise fundamental analysis module.

• Karthik Rangappa says:

Yes, that’s important to understand before doing this module. Good luck, Ganesh.

69. Vibhore Gupta says:

Thanks for replying back, I did the financial modelling course from Udemy. Looking forward for insights from zerodha varsity.

• Karthik Rangappa says:

70. Naga Priyesh Reddy Chappidi says:

i have started learning the zerodha varsity but many things i couldnt understand.is there any zerodha varsity youtube channel to see rather than reading

• Karthik Rangappa says:

No youtube, Naga. Not yet, hopefully soon.

71. Yash Luthra says:

Great information on financial modeling. The synopsis of the module was awesome with easy learning language.

• Karthik Rangappa says:

Thanks, Yash. Hope you like the module.

72. Rahul Soni says:

Thanx sir for this latest module
Every module is very helpful for me
Great work sir
Thank you so much

• Karthik Rangappa says:

Happy learning, Rahul!

73. Nikhil Battula says:

Hai Karthick Sir
could we expect a module on quantitative analysis? from you (which u have mentioned is important in developing a point of view while taking decisions in the market)

And Really thanks for giving us financial literacy

74. Nikhil Battula says:

Thank you Karthik Sir

75. Ankit says:

Will I get a notification if you respond my message?

• Karthik Rangappa says:

Unfortunately no 🙂

76. Ankit says:

You should open a coaching center named Varsity and teach this there and thank me later, it is too much to learn here can’t decide where to read, currently I had completed “Module 1- Basics of. . .”, “Module 2- Technical. . .”, “Module 4- Futures. . .”, (from the website not the app) and am confused if to start “Module 5- Options. . .” or to start “Module 11- Personal fin. . .”. Help me please!

• Karthik Rangappa says:

You can choose any of which. Both are different topics anyway.

77. Gaurav Jain says:

Nice Modules. Teaches everything in simple language. Even a laymen can understands them.

• Karthik Rangappa says:

Happy learning!

78. Shibin Jacob says:

Dear Karthik Sir

I can’t thank you enough for all the knowledge you are sharing via Varsity. All chapters I have read so far are simply awesome(I have to admit, Options were bit hard to understand :)). Some time back, words like finance, stock market, trading, investing etc were very hard to digest for me. But Varsity alleviated all sorts of such difficulties and now I have more insight than ever. You and your team certainly made a difference in my life. I am pretty sure with a lot of people who read Varsity. I have got nothing else to say, but keep going. KR rocks!!!

Coming into my questions

1. I havent created a stock portfolio of my own yet. I am not sure which stocks to select. I havent read the FA module yet as I was more interested in trading. I believe I will know where to start if I get a grip of FA. But I assume this module will be the last piece in the puzzle to build a financial model for choosing quality stocks for investment. Please correct me if I am wrong

2. I just came across this post where you gave an answer related to investing in companies filed IPO

Does this module deal with all the things(in detail) you mentioned in your answer?

• Karthik Rangappa says:

Thanks for the super kind words, Jacob.

1) Yes, this module along with FA will help.
2) Yes, most of it will be covered here.

79. Shibin Jacob says:

You’re welcome sir

• Karthik Rangappa says:

Hope you will like the module 🙂

80. Jai says:

Thanks a lot for starting this module Karthik sir. Just one question that, will there be a certification exam available for this module too?

• Karthik Rangappa says:

Not on the web, but will have the certification on the Varsity app.

81. Sathanandh says:

sir could you recommend any books/materials for comprehensive analysis of stocks and derivatives?

• Karthik Rangappa says:

We have a lot of material on these topics in Varsity itself 🙂

82. Jateen says:

More power to you sir. Doing great job 🙂

• Karthik Rangappa says:

Happy learning, Jateen.

Sir, Its a great efforts of you, thanks for sharing your knowlege and helping us for grow.

• Karthik Rangappa says:

Happy learning, Pratik!

84. Karthick S says:

Great work, great effort, I dono how much days you have spent to make this available here for user’s, that too for free of cost really appreciated and it’s admirable, have downloaded 11 modules yet to go through hope I would enjoy every module, one obligation last two module are not available to download as a PDF is it possible to provide the same so that all of us can read it in offline also, thank you so much for providing such a wonderful learning materials.

• Karthik Rangappa says:

Module 13 in Financial modelling will be put up only after its completed. Module 12 cant be converted to PDF 🙂

I’m glad you liked the content on Varsity 🙂

85. Sowmya says:

Expecting full financial modelling as soon as possible

• Karthik Rangappa says:

Hopefully soon, Sowmya.

86. Prashant says:

Dear Karthik, great efforts .
( sorry, I am poor in this part)

• Karthik Rangappa says:

Prashanth, I guess there are plenty of videos on Youtube, I request you to check that. Thanks.

87. Shanakar says:

88. Rahul Deva says:

• Karthik Rangappa says:

13 module is not complete no? How can we put up the PDF? 12 we wont put up the PDF.

89. Utpal Khardenavis says:

Wonderfully written. Its easily understandable for people like me who hasnt been in touch with theoretical finance for quite some time. Thanks Karthik and team!

• Karthik Rangappa says:

90. sagar says:

Nicely explain, is that any chances to manipulated the balance sheet and P&L statement by the company for attracting the retail investors ? if yes , then any method apprehend to this.

• Karthik Rangappa says:

Yes, companies have done that in the past.

91. ASHOK says:

Really useful for a person like me and many others, who dont have much theoretical knowledge on financial analysis and financial management. Explanation in its simplest form ! Thank you so much, Sir.

• Karthik Rangappa says:

92. Prabhu says:

So nice about zerodha that it is helping it’s customers to learn about the markets in order to avoid being cheated.
Thank you for that and excited for learning this long waited module.

• Karthik Rangappa says:

Happy reading, Prabhu. Btw, this is open for all, not just for Zerodha customers 🙂

93. Prasath Balasubramanian says:

All my academic studies given me a tough life while in earning or learning… but getting into Varsity lot of Value addition in my personal as well as professional life

Zerodha Varsity is my real Academy or Gurukul & Karthik Rangappa is my real Teacher or Guru

• Karthik Rangappa says:

Thanks so much for the kind words, Prasath. I hope you will enjoy reading and learning from Varisty.

94. Kishan P V says:

A good module, looking forward in reading next chapters.

• Karthik Rangappa says:

I’ll try and put up the content soon.

95. ANish says:

Hi K,
Thanks a lot for these great learning resources free of cost :).
Can I consider this module as a continuation of Fundamental Analysis… as I can see it help if we jump to this module after completing the FA.

• Karthik Rangappa says:

Yes, both these modules are quite interconnected 🙂

96. ANish says:

Sir, Thanks for the reply 🙂 Will try to connect these two modules concepts throughout.

• Karthik Rangappa says:

Sure, Anish. Do let me know if you have any queries.

97. Jeyasri says:

These are so informative. Thanks a top zerodha team.

• Karthik Rangappa says:

Happy learning, Jeyasri 🙂

98. ANish says:

Sure sir.. will let you know:)

• Karthik Rangappa says:

Good luck!

100. Sanand Srivastava says:

It would be better a Handbook containing piquancy of all modules will be a treasure for the beginners.

• Karthik Rangappa says:

Sure, can you eloborate on this please?

101. M. Kumar says:

Sir please provide the hindi pdf also.

• Karthik Rangappa says:

Noted.

102. Anand says:

Hello… I have been reading all your varsity and this is really awesome effort in this era to simplify such complicated subjects into understandable bits. I have a small point related to innerworth-mind over markets as comments are closed in that module. I liked first three chapters and my request is can I have a next chapter link towards end of one chapter so that I can move to next chapter without going back and forth in the browser. I dont know if its possible, but I thought I would first let you know about this issue in that module. Overall, hats off for your effort… You deserve recognition at the highest possible level Professor….

• Karthik Rangappa says:

Tanks, Anand. We closed the comments section because of the large number of articles in inner worth. About the next chapter link, let me check.

103. Dinesh K says:

Hi Mr. Karthik, certainly this is a good initiative. By the end of this, May i become an expert ?

• Karthik Rangappa says:

Not sure about that, but at least it will be a step in that direction 🙂

104. Tanish jain says:

Does the reader should have excess to the excel sheet? is it necessary?

• Karthik Rangappa says:

105. Kapil soni says:

Hello sir is there any book available …

• Karthik Rangappa says:

Not yet, all the content is here itself.

106. basil says:

SIr can make a pdf copy this module ? . i have downloaded all other modules pdf and taken a printout but in this module i cannot see the download option

• Karthik Rangappa says:

PDFs are generated once the module is completed. This module is still work in progress.

107. Ragul S says:

I am in CA Final planning to do Investment Banking for that Financial modelling is required so this module above is the first thing I learnt. It is Very interesting and am excited.
Like Watching Money Heist curious to learn and grow to become the professor (Financial modelling expert) 😁😁

• Karthik Rangappa says:

I hope you do. I’ll put up the next chapter today 🙂

108. VIJAY says:

HAPPY TEACHERS DAY @ Karthik Sir

• Karthik Rangappa says:

Thank you and happy learning!

109. Sunit says:

Thanks a ton for this Module !!

Though I am not able to view this on the Android App. I was hoping to see it in the app too since it is much more feasible for me to learn from my phone.

Can I expect the update on the app anytime soon?

• Karthik Rangappa says:

The module is not complete, Sunit. It will get updated when the module is complete, which will take sometime.

110. Sunit says:

And I had another question regarding the slight difference in content in the app and the website since there are links given in the app for “further reading” on the website.

Would you recommend learning from the website rather than the app to streamline the learning process?

• Karthik Rangappa says:

Both are similar Sunit 🙂

111. Aryan Ali Mondal says:

Sir i am reading to this book in the late night literally this book gives a great feeling, better understanding, outstanding knowledge and all. Thank you sir to provide this types of modules it’s makes a future traders,value analyser and many more ( if everyone read this book seensearly) and lastly again thank you sir 🙂

• Karthik Rangappa says:

112. MAYANK GUPTA says:

how to select stocks from the whole stock universe to apply integrated financial modelling?. we cannot do this for each and every stock.

• Karthik Rangappa says:

That’s right. Building a model is the last stage of your analysis. Before this, you need to run a decent fundamental analysis on the company. I’ve explained that in the fundamental analysis module.

113. ARUN BALAJI says:

Sir It seems like a CMA (Credit Monitoring Arrangement report). its correct sir?

• Karthik Rangappa says:

Nope, this is a pure equity research report. But yes, the CMA has a similar structure I suppose.

114. Anugrah k says:

Thank you very much sir, expecting more modules from you sir

• Karthik Rangappa says:

Hopefully 🙂

Hi can you please recommend any resources (ytube or books) to learn excel for financial modelling

116. Anurag Perala says:

Sir, after the completion will we provided with certificate of this module?

• Karthik Rangappa says:

Maybe, once it goes up on the app.

117. CK says:

The language of the course is more simpler than the curriculum. Spent more than 90k to learn the markets with the wrong guy, fooling people

• Karthik Rangappa says:

Ah, sorry to hear that you had to spend 90K. Hope you find the content here useful. Happy learning.

118. Sai Krishna Praneeth Duggirala says:

hope this comes with a certification as well

• Karthik Rangappa says:

Not on the web, maybe it will once we take this to the app.

119. SANDIP GUMTYA says:

• Karthik Rangappa says:

All, expect this one and innerworth.

120. ishaan bhasin says:

sir, please the pdf of module 12 and 13 too, so that i can easily download it completely

121. Krishna says:

Why it isn’t available in Varsity App?

• Karthik Rangappa says:

Will be once the content is completed.

122. Maithilesh says:

• Karthik Rangappa says:

123. sahib says:

Please make the option to download the module available for this one too. That really helps to make notes by underlining and highlighting text in pdf.

• Karthik Rangappa says:

Once the module is complete.

124. shiva says:

Hi, Karthik your writings are great and easy to understand. Please continue what you’re doing. I’m (MBA) working as a power bi developer can I get into the asset management industry or investment banking career.

• Karthik Rangappa says:

Thanks, Shiva. I think power bi is widely used for dashboards and reporting. So I guess you do have a chance.

125. Mihir says:

Wow, excited to learn. Find really easy to understand, great work Sir

• Karthik Rangappa says:

Happy learning, Mihir!

126. Rohit says:

Is there any pdf for this module?

• Karthik Rangappa says:

Not till the module is complete, Rohit.

127. Mukul Pandya says:

Hell Karthik,
Your way of teaching such difficult topics in very structured and detailed manner is highly appreciable. Keep up the good work and spread this knowledge.

• Karthik Rangappa says:

Thanks, Mukul. Happy to know that you liked the content on Varsity.

128. NAVEENKUMAR K says:

Hi Sir,

I am reading Varsity Innerworth Module daily. In Module 12 Innerworth — Mind over markets → Chapter 362 Seeing a Creative New Idea. The same content is repeated twice after 8th Paragraph. Thanks!

• Karthik Rangappa says:

Checking on this, Naveen.

129. Samir says:

Hi, I have a Tickertape Pro Subscription.
There I can find the valuations of the company and many other insights for a company.
So, is this module useful for me still?

• Karthik Rangappa says:

Its like take a stock tip from someone versus you doing your own research 🙂

130. Samir says:

Ok Sir, that’s quite intriguing. If I do my own research my conviction will be quite strong for a particular stock.

But at the same time, professionals at tickertape must be quite expert and they may also be doing the same amount of hard work and providing the insights. My point is why should I do the same amount of labour, if I am getting these through people who are more talented and expert than myself.
Please note that I am quite novice to the Finance field and it will take me few months/years to really play with these financial stuffs and be an expert. Till then how should I invest?

• Karthik Rangappa says:

Samir, I agree. Its just about developing a good conviction on the stock. Comes in handy in bear markets 🙂

131. Akash says:

The best part of Varsity is you don’t have to mug up every single concept.
it gives you the knowledge which makes you comfortable as a beginner and you try to do it on your own.
by dealing with it practically you are solving them and when you solve them it excites you, and those hard concepts will be remembered forever.

SO, it’s a recommendation whenever you want to start any exhaustive course of finance give try to Varsity first, so you love your exhaustive course and enjoy it.

• Karthik Rangappa says:

Thanks for sharing that point of view, Akash 🙂

132. Suraj says:

Hello Karthik!
In the above article you have mentioned “I don’t know if financial modelling is taught in the classic article format. I could make a huge mistake attempting this task, but I think it is worth the shot.”

Now that you have completed writing 11 chapters, do you think it is a good way to learn financial modelling from this module?

I am new to financial modelling and interested in learning, I hope this module is the right way to learn.

• Karthik Rangappa says:

Suraj, being the author of this module, it will be very difficult for me to give you an answer. I’d suggest you read through a bit and see if it works well for you.

I would like to say that varsity modules are the best and easiest way to understand the capital market. I am an MBA (finance) and also have a NISM certifcate in Research Analysis, but the modules of varsity are much more easier and practical than the study material provided by NISM, the fundamental analysis covers all the essential parts of financial analysis in the simplest way possible with practical approach ofcourse.
I would like to thanks Karthik Rangappa Sir for his efforts in making finance easy for all.

• Karthik Rangappa says:

Thanks for the kind words, Aditya! Happy learning 🙂

134. Sanjay Sudhakar says:

Hello Karthik Rangappa,
What you and your team doing is nothing less than phenomenal. Thanks for these.

• Karthik Rangappa says:

Thanks for the kind words. Happy learning, Sanjay!

135. Zed says:

Sir, I would like to know what kind of difference will there be between stocks that we pick for investing using fundamental analysis and the ones that we pick using Integrated financial modelling? Which of the two methods according to you is a better gauge for predicting the company’s future performance and its change in share price?

• Karthik Rangappa says:

So you pick stocks that you think are fundamentally good and would have done one round of due diligence. Once you are convinced, the 2nd step is to build the model and get a deeper understanding of the company. You don’t really start with the financial model directly.

136. Chetan Nahata says:

Hello Kartik Sir,
1. Does Zerodha have a fully automated Algo trading platform (came across AlgoZ on the web) or is it discontinued?
2. Can we fully automate Streak?

• Karthik Rangappa says:

1) No.
2) Yes, do talk to them once. Not fully I guess.

137. Chetan Nahata says:

Thanks once again sir :),
To be frank it sort of gives me the courage to explore markets deeper than just investing and trading knowing I could quickly get any of my doubts solved through you just by posting a comment varsity.
thanks a lot, sir:)

• Karthik Rangappa says:

Happy learning, Chetan.

138. Chetan Nahata says:

Hello, once again sir,
Actually, there are two topics about Zerodha I’d like to have an update on namely :
1. trading cross currency pairs with Zerodha
2. Investing in the US via Zerodha after the NSE IFSC thing

Thanks for all of your work Sir 🙂

• Karthik Rangappa says:

Both are in the pipeline but not up on our to-do priority list.

139. Bharat says:

Hii Karthik Sir
Now that all the modules have been released, can we get a single PDF which can be used to highlight, comment etc.

• Karthik Rangappa says:

We will try and do that soon, Bharath.

140. Gopi says:

One of the best & best tool is varisity. Always rocking Mr.karthick rangappa sir.

• Karthik Rangappa says:

Thanks, Gopi! Happy learning 🙂

141. Rushabh Gala says:

Very great of you to insert this module into varsity. People spend lakhs of Rupees in training for doing valuations. Thank you so much.

• Karthik Rangappa says:

Happy learning!

142. Sujeet Kumar says:

• Karthik Rangappa says:

Thanks. We are working on adding more videos.

143. Sonal says:

Hi,
Thanks for sharing financial modelling module. I really like this initiative from varsity, it’s really helpful 🙂
However, can we have this course explained on Youtube (Live or recorded session).

• Karthik Rangappa says:

Thanks Sonal. I’ve noted your feedback, will try and do these videos sometime.

144. Abhishek Kumar says:

Insightful series for learning Financial Modelling.

• Karthik Rangappa says:

Happy learning!

145. Brijesh Panchal says:

How can I download complete pdf for module 13 and module 14? Please suggest. Option of download pdf does not appear at the end of these two modules.

• Karthik Rangappa says:

We are yet to make these PDFs.

146. Ravindra says:

• Karthik Rangappa says:

Yes, we will put up the PDFs soon.

147. Surendra says:

Why module 13. Integrated Financial Modelling and 12. Inner worth — Mind over markets are not available on mobile app?

• Karthik Rangappa says:

We will update the PDF for Module 13. We cannot do PDF for Module 12.

148. Sourabh Banerjee says:

Hey Karthik Sir

Wishing you and the entire Zerdha Team an adventurous, eventful 2023.

Rgds
SB

• Karthik Rangappa says:

Thanks and wishing you the same 🙂
We are yet to prepare the PDF for this module.

149. Amit Raj says:

I want modual no 12,13,14

• Karthik Rangappa says:

150. Sandeep says:

Hey Karthik, this is a wonderful series, thanks for all the hardwork in compiling all these. Can you please provide the pdf version for this ?

• Karthik Rangappa says:

We will do that soon, Sandeep!

151. Dhananjay says:

Why this module isn’t there in the Varsity app? I am only able to see 11 modules till Personal Finance

• Karthik Rangappa says:

We are yet to app. Also, this maybe a little complicated for the app. Trying to figure.

152. Harshpreet says:

will this module be enough to learn everything about this area if I want to intern in this field? It is too difficult to find internships for a fresher in this field.

• Karthik Rangappa says:

153. Harshpreet says:

How can someone go forward after completing this?

• Karthik Rangappa says:

Pick a company of your choice and try to model it 🙂

154. Vishruth Aggarwal says:

Please provide the PDF for this module.
it has been very long since there has been no update to this module

• Karthik Rangappa says:

Noted.

155. tushar says:

sir,please provide the pdf for this module.

156. Rakshay Jain says:

Hi sir, this financial modelling module is not available on the app. Btw thank you for all your efforts

• Karthik Rangappa says:

Not yet, Rakshay. We will do it soon.

157. Vineet says:

Hello, how I can access the downloadable pdf of this module, the way it is available for other modules ?
Thanks

• Karthik Rangappa says:

We will put this up soon.

158. Banibrata Dutta says:

Thanks for the excellent material. Unlike most other modules, this one doesn’t have a consolidated PDF for one to download and read on an ebook reader, on the go. Would be very nice to have the PDF.

• Karthik Rangappa says:

This is on the cards, we will do soon. Thanks.

159. Digvendra Singh says:

Okay so it’s best to have the numbers and metrics directly from the annual report, but if I am screening companies based on some metrics using a screener then the data will be fetched from a random vendor only. I cannot go through the annual reports of each and every company. So if I am using a screener then how to authenticate the data ?

• Karthik Rangappa says:

You can use 3rd part services like Screener and Tijori for screening and reducing your workflow, but you will eventually have to look at the AR to validate your information.

160. Chaynika says:

Hi,

• Karthik Rangappa says:

We will put this up.

161. Digvendra says:

• Karthik Rangappa says:

Tickertape is nice too.

162. Krish says:

163. Ajeeth says:

Hi Vineet Sir,

Can I get the option to download the whole content in a single PDF like it is until Module 11. I don’t like reading from laptop or through mobile, I would take a print and study and make my notes on that. I like it old school which I’m a big fan of. Please give the option to download all the content in a single PDF for all modules after module 11. Thank you and hope to see this option soon. Please please.

• Karthik Rangappa says:

Ajeeth, we will put up the PDF soon.

164. Raghavan says:

Hello Karthik,
Once again thank you and Zerodha for creating such beautiful content, similar to Varsity certification. Please provide more certification opportunities for the users and let it be continuous learning.

• Karthik Rangappa says:

Thanks, Raghavan. Point noted.

165. Anirudh Jain says:

Hello, Karthik sir, Thank you for creating all the modules, they were really really amazing. It will be very helpful if you can make video sessions on this module “Integrated Financial Modelling” to understand more easily this practical approach module.

• Karthik Rangappa says:

Thanks, Anirudh. Will take note on the Financial modelling module 🙂

166. Balakrishna Reddy says:

Sir can we expect this module in PDF Format. Please make it available in pdf format. It really helps us. Thank you

• Karthik Rangappa says:

Sure, we will do that soon. Thanks.

167. Rohan S says:

Hi, Really grateful for such valuable content. It would really be helpful if pdf version is available for this module too 🙂

• Karthik Rangappa says:

Sure, Rohan. We will work on it. Thanks.

168. ss says:

plz provide the pdf

• Karthik Rangappa says:

We will, soon.

169. Ronak says:

Can you please make this module available in PDF format? It will be of great help.

• Karthik Rangappa says:

Its on the agenda, we will.

170. soumitra says:

very soon I am going to reach module 13. please make the pdf. A humble request from your student.

• Karthik Rangappa says:

Noted, Soumitra. Will try our best.

171. Arin says: