Annexure-I

Summer Internship Project

On
A Study of the various financial planning and financial
Modeling decisions
(InternShala)

Submitted in partial fulfillment of the requirements

For the award of the degree of

Bachelor of Business Administration (BBA)

To

Guru Gobind Singh Indraprastha University, Delhi

Guide: Submitted by:

Ms. Divya Gupta Rohan Chopra
(Assistant Professor) Roll No: 42414201718

Jagannath International Management School,

Vasant Kunj New Delhi-110070

Batch (2018-2021)

1
 Annexure-II
Certificate

2
 CERTIFICATE FROM COLLEGE

This is to Certify that the Project Report (BBA-311) titled “A Study of the
various financial planning and financial modeling decisions (Internshala)”
done by Rohan Chopra, Roll No. 42414201718, is completed under my
guidance.

Signature of the Guide

Date:
Name of the Guide:
Ms. Divya Gupta (Assistant
Professor)

3
 Acknowledgement

I offer my sincere thanks and humble regards to Jagannath International

Management School, GGSIP University, New Delhi for imparting us very

valuable professional training in BBA.

My sincere gratitude goes to my project guide Ms. Divya Gupta without whose

valued guidance, encouragement and inspiration the presentation of this project

would ever have been possible. I also indebted to my faculty guide Ms. Divya

Gupta for giving me valuable initial guidance for the project.

Every page of this report reminds me about the moral support and guidance that

was bestowed on me by the respect guide, professors, friends and family

members throughout the duration of the internship.

I am unable to mention many others who have helped me greatly but it

gives immense pleasure to appreciate and thanks all those without whose

encouragement and help this project would never have been completed.

4
 Annexure-III

CONTENTS

S No Topic Page No
1 Summer Training Certificate 2
2 Certificate 3
3 Acknowledgements 4
4 Chapter I: Introduction 6-17
 Objectives of the study
 Review of Literature
 Research Methodology
 Limitations of the study

5 Chapter-2: Profile of the Organization 18-20

6 Chapter-3: Analysis and Interpretation of Data 21-27
7 Chapter-4: Conclusions and Recommendations 28-35
8 References/Bibliography 36-37
9 Annexures 38-40

5
CHAPTER I: INTRODUCTION TO THE PROJECT

6
Financial modeling is the process of creating a summary of a company's

expenses and earnings in the form of a spreadsheet that can be used to calculate

the impact of a future event or decision.

A financial model has many uses for company executives. Financial analysts

most often use it to analyze and anticipate how a company's stock performance

might be affected by future events or executive decisions.

Financial modeling is one of the most desired skills in today’s corporate world.

The demand of a financial modeling analyst is increasing day by day. It is no

surprise that the essential skill required by finance professionals is proficiency

in financial modeling. It should also help to get clear on what exactly makes

organisation different from competition, which can make or break organisation

chances of standing out in a crowded landscape

Financial modeling is a representation in numbers of some or all aspects of a

company's operations.

Such models are intended to be used as decision-making tools. Company

executives might use them to estimate the costs and project the profits of a

proposed new project. Financial analysts use them to anticipate the impact of an

economic policy change or any other event on a company's stock.

7
Objective of the Study

(1) To Link a company’s historical financial statements,

(2) To create assumptions about how a business will perform in the future,

(3) To Project a financial forecast and then valuate a business,

(4) To evaluate transactions such as mergers and acquisitions. By building an

abstract representation of a business in Excel, all of the objectives above are

achievable.

8
1.2 Review of Literature
1. Financial Modeling and Valuation by Paul Pignataro

In this Paul Pignatro explains that financial modeling is the fundamental

building block of analysis in investment banking. We will take a look at

Walmart and analyze its financial standing, building a complete financial model

as it would be done by Wall Street analysts.

2. Financial Modeling (MIT Press)

It is explained that in MIT press Too often, finance courses stop short of making

a connection between textbook finance and the problems of real-world

business. Financial Modeling bridges this gap between theory and practice by

providing a nuts-and-bolts guide to solving common financial models with

spreadsheets. Simon Benninga takes the reader step by step through each model,

showing how it can be solved using Microsoft Excel.

3. Financial Analysis and Modeling Using Excel and VBA

In this the financial Analysis and Modeling Using Excel and VBA, Second

Edition presents a comprehensive approach to analysing financial problems and

developing simple to sophisticated financial models in all major areas of finance

using Excel 2007 and VBA (as well as earlier versions of both). This expanded

and fully updated guide reviews all the necessary financial theory and concepts,

and walks you through a wide range of real-world financial problems and

9
models that you can learn from, use for practice, and easily adapt for work and

classroom use. A companion website includes several useful modeling tools and

fully working versions of all the models discussed in the book.

4. Financial Modeling for Business Owners and Entrepreneurs:

In Financial Modeling for Business Owners and Entrepreneurs Developing

Excel Models to Raise Capital, Increase Cash Flow, Improve Operations, Plan

Projects, and Make Decisions may be one of the most important books any

entrepreneur or manager in a small or medium-sized enterprise will read. It

combines logical business principles and strategies with a step-by-step

methodology for planning and modeling a company and solving specific

business problems.

5. Financial Modeling (By Stephane Crepey)

In this Stephane Crepey explains the observed and the changes in marketing

practices stressed that in addition to devising strategies to generate

prescriptions, in the new environment, the firm must devise method to

strengthen retailing. He said if retailing is not focused, generated prescriptions

are likely to get substituted by similar brands of other companies

10
1.2.1 Time value of money

The time value of money (TVM) is the concept that money you have now

is worth more than the identical sum in the future due to its potential earning

capacity. This core principle of finance holds that provided money can earn

interest, any amount of money is worth more the sooner it is received.

Formula

 FV = Future value of money

 PV = Present value of money

 i = interest rate

 n = number of compounding periods per year

 t = number of years

Based on these variables, the formula for TVM is:

FV = PV x [1 + (i / n)] (n x t)

11
1.2.2 Net Present Value (NPV)

In finance, the net present value (NPV) or net present worth (NPW) applies

to a series of cash flows occurring at different times. The present value of a cash

flow depends on the interval of time between now and the cash flow. It also

depends on the discount rate. NPV accounts for the time value of money. It

provides a method for evaluating and comparing capital projects or financial

products with cash flows spread over time, as in loans, investments, payouts

from insurance contracts plus many other applications.

Time value of money dictates that time affects the value of cash flows. For

example, a lender may offer 99 cents for the promise of receiving $1.00 a month

from now, but the promise to receive that same dollar 20 years in the future

would be worth much less today to that same person (lender), even if the

payback in both cases was equally certain. This decrease in the current value of

future cash flows is based on a chosen rate of return (or discount rate). If for

example there exists a time series of identical cash flows, the cash flow in the

present is the most valuable, with each future cash flow becoming less valuable

than the previous cash flow. A cash flow today is more valuable than an

identical cash flow in the future because a present flow can be invested

immediately and begin earning returns, while a future flow cannot.

12
1.2.3 EMI

EMI or equated monthly instalment, as the name suggests, is one part of the

equally divided monthly outgoes to clear off an outstanding loan within a

stipulated time frame.

He EMI is dependent on multiple factors, such as:

1) Principal borrowed

2) Rate of interest

3) Tenure of the loan

4) Monthly/annual resting period

13
 1.2.4 Financial statement
Financial statements are written records that convey the business activities and

the financial performance of a company. Financial statements are often audited

by government agencies, accountants, firms, etc. to ensure accuracy and for tax,

financing, or investing purposes. Financial statements include:

 Balance sheet

 Income statement

 Cash flow statement.

14
 1.2.5 Financial statement analysis

Financial statement analysis is the process of analysing a company's financial

statements for decision-making purposes. External stakeholders use it to
understand the overall health of an organization as well as to evaluate financial
performance and business value. Internal constituents use it as a monitoring tool
for managing the finances.

1.2.5 Valuation

Common terms for the value of an asset or liability are market value, fair value,

and intrinsic value. The meanings of these terms differ. For instance, when an

analyst believes a stock's intrinsic value is greater (or less) than its market price,

an analyst makes a "buy" (or "sell") recommendation. Moreover, an asset's

intrinsic value may be subject to personal opinion and vary among analysts.

The International Valuation Standards include definitions for common bases of

value and generally accepted practice procedures for valuing assets of all types.

Regardless, the valuation itself is done generally using one or more of the

following approaches; but see also, Outline of finance #Valuation:

15
 1.3 Research Methodology

The research methodology defines what the activity of research is, how to

proceed, how to measure progress, and what constitutes success. It provides us

an advancement of wealth of human knowledge, tools of the trade to carry out

research, tools to look at things in life objectively; develops a critical and

scientific attitude, disciplined thinking to observe objectively (scientific

deduction and inductive thinking); skills of research particularly in the ‘age of

information’.

 Every project work is based on certain methodology, which is a way

to systematically solve the problem or attain its objectives. It is a very

important guideline and lead to completion of any project work

through observation, data collection and data analysis.

The research methodology is a science that studying how research is done

scientifically. It is the way to systematically solve the research problem by

logically adopting various steps. Also it defines the way in which the data are

collected in a research project.

Qualitative, quantitative and mixed-methods are different types of

methodologies, distinguished by whether they focus on words, numbers or both.

16
1.4 Limitations of the study

While robust models help to understand possible outcomes by building in

drivers we know, it fails to build in the unexpected. A great example of this was

the 2008 crisis where no model seemed to take into consideration what would

happen if housing prices fell. It was an assumption that housing and land

appreciate forever and ever

two, no manager should rely on a model without considering the subjective

elements that go into any transaction. It’s hard to model in behaviour. So the

synergy model we built for an M&A transaction takes no consideration of

integration issues, leading to overvaluation of an asset. Finally, Confucius did

say, ‘Study the past if you would define the future’, history has shown us that it

is not a guarantee, so while a robust financial model can greatly help simulate

possible outcomes helping us arrive at a conclusion, it cannot be the sole factor

on which a decision is made.

17
CHAPTER-2: PROFILE OF THE ORGANIZATION

18
About Internshala. :-

Internshala is a dot com business with the heart of dot org. A technology

company on a mission to equip students with relevant skills & practical

exposure through internships and online trainings.

Internshala is an internship and online training platform, based

in Gurgaon, India. Founded by Sarvesh Agarwal, an IIT Madras alumnus,

in 2010, the website helps students find internships with organisations in

India.

History

The platform, which was founded in 2010, started out as a Word

Press blog that aggregated internships across India and articles on

education, technology and skill gap. Internshala launched its online

trainings in 2014. As of 2018, the platform had 3.5 million students

and 80,000 companies.

Partnerships
In August 2016, Telangana's not-for-profit organisation, Telangana
Academy for Skill and Knowledge (TASK) partnered with Internshala to
help students with internship resources and career services.

In September 2016, Team Indus, Google XPRIZE shortlisted entity has

partnered with Internshala for college outreach for its initiative, Lab2Moon.

19
 Awards and recognitions

In 2011, the website became a part of NASSCOM 10K Startups. In

2015, Internshala was a finalist in People Matters TechHR 2015

Spotlight Awards under 'Futurism in Recruitment' category.

Website: https://internshala.com

Industries: Education Management

Company size: 51-200 employees

Headquarters: Gurugram, Haryana

Type Privately Held

Founded: 2010

Specialties: Internships, Intern hiring, Recruitment, online training, and e-

learning

20
CHAPTER-3: ANALYSIS AND INTERPRETATION OF DATA

21
 There are certain questions which were asked to a selected population in a

survey and results were found matching with the objective of this project.

1).Do you know about Financial Modeling and valuation?

Option Responses
Yes 56
No 14

Responses

60
50
Responses
40
30
20
10
0
Yes No

2)/Do you have basic knowledge of Ms Excel?

22
 Option Responses
Yes 58
No 2

Responses
70

60

50

40 Responses

30

20

10

0
Yes No

23
3).Do you have any previous Experience in making financial decisions?

Option Responses
No experience 20
1 to 2 years 19
2 to 4 years 8
4 to 6 years 9
More Than 6 years 4

Responses
25
20
15
10
Responses
5
0
ce s s s s
ar ar ar ar
ir en ye ye ye ye
pe 2 4 6 6
ex to to to ha
n
1 2 4
No eT
or
M

4)/Have you ever used investment decision techniques?

24
 Option Responses
Yes 36
No 24

Responses

40
35
30
Responses
25
20
15
10
5
0
Yes No

5).Which of the following techniques have you used?(if any)

25
 Option Responses

Payback period 15
method
Accounting rate of 13
return (ARR)
method

Discounted cash
flow (DCF)
method

Responses
16
12
8
4
0
Responses

6).Will you recommend financial modeling and valuation to other people?

26
 Option Responses
Yes 50
No 10

Responses
60

50

40
Responses
30

20

10

0
Yes No

CHAPTER-4: CONCLUSION AND RECOMMENDATIONS

27
4.1 CONCLUSION

28
This training has provided me the best and easiest way to understand and

valuate financial modeling techniques. This program is very feasible in terms of

quality.

This project assigned to the team was good and this project was not only

restricted to particular domain in management but was covering many important

aspects in management.

It will upskill your financial performance. You will create financial models that

can be understood and easily implemented to gain insights into the opportunities

and risks being faced by businesses.

The Financial Modeling could be beneficial to a vast majority of peoples, some

of the cases are summarized below

 The aspirants of Financial Modeling Course can be everybody who wants

to explore the world of finance and get involved in money related
decision making. These people can be Executives, Business planning and
strategy deciders, Managers working with Banks, Equity
Researchers, Project Managers, Research Analysts, Investment Banking
people, Portfolio Managers, Commercial Bankers, Risk Managers,
Accountants, and all those who are part of the finance department in all
types of the firms
 It’s an added advantage for those people who are pursuing CA,
MBA, CFA, FRM and Commerce graduates
 Also, the candidates having Degree, Diploma, in technical fields like
B.TECH or Engineering who wants to make a career in finance
 Any individual who just want to gain knowledge out of passion or
curiosity

29
Some of the key learning’s of this project are discussed here:

1. Understanding Excel

Microsoft Excel is a spreadsheet program used to record and analyze numerical

and statistical data. Microsoft Excel provides multiple features to perform
various operations like calculations, pivot tables, graph tools, macro
programming, etc. It is compatible with multiple OS like Windows, macOS,
Android and iOS.

An Excel spreadsheet can be understood as a collection of columns and rows

that form a table. Alphabetical letters are usually assigned to columns, and
numbers are usually assigned to rows. The point where a column and a row
meet is called a cell. The address of a cell is given by the letter representing the
column and the number representing a row.

Financial Modelling has become an advanced branch of the Financial World.

Excel is adding icing to the cake prepared by the Financial Experts. Financial
Modelling for beginners has transformed into an innovative piece of
information. That’s why most of the Finance aspirants are looking
for Simple Financial Model Excel.

Financial analysts take more pain to work on the excel sheet to control and
predict the upcoming trends. For a layman, who is working in some other
industry might be wondering, why Financial Analysts use Excel for? For
Financial Experts, Excel training can help them to predict past trends to predict
future trends. A 1MB Excel file can help a Financial Expert to use some strokes
on keyboards and do wonders in the prediction of data.

30
For those who are new, they can search Excel Financial Training tutorials on
websites and from the esteemed organization. Who are conducting seminars and
workshops to train how to build a financial model in excel.

2. Investment Decision-making
Investment refers to the purchasing of productive capacity or capital expenditure (spending
by a business to buy fixed assets e.g. property, vehicles etc)
2.1 Payback period method
This method of investment appraisal calculates how long it takes a
project to repay its original investment. The method therefore
concentrates on cash flow, highlighting projects that recover quickly their
initial investment. Here is an example of how it works.

A company is considering two different capital investment projects. Both are

expected to operate for four years. Only one of the projects can be financed.
The payback periods are calculated by adding annual depreciation back to the
cash flows: depreciation is a non-cash expense that reduces profit, and so the
profit figures given understate the cash inflows by the amount of the
depreciation. Cash flow in year 4 is also increased by the scrap values for each
project.

2.2 Accounting rate of return (ARR) method

This method of investment appraisal calculates the expected profits
from the investment, expressing them as a percentage of the capital
invested. The higher the rate of return, the ‘better’ (i.e. the more
profitable) is the project. The ARR is therefore based on anticipated
profits rather than on cash flow.
Its disadvantages are that it ignores the timing of a project’s
contributions. High profits in the early years – which can be estimated

31
 more accurately, and which help minimise the project’s risk – are treated
in the same way as profits occurring later. It also concentrates on profits
rather than cash flows, ignoring the time value of money (profits in the
later years being eroded by the effects of inflation)

2.3 Discounted cash flow (DCF) method

The principle of DCF is based on using discounted arithmetic to get a present

value for future cash inflows and outflows. This method is sometimes divided
into two elements, which complement each other:

 the net present value (NPV) method, which takes account of all

relevant cash flows from the project throughout its life, discounting
them to their ‘present value’
 the internal rate of return (IRR) method, which compares the rate of
return expected from the project with that identified by the company as
being the cost of its capital – projects having an IRR that exceeds the
cost of capital are worth considering.

The NPV method calculates the present value of the project’s future cash flows.
Each year’s cash flow is discounted to a present value, which shows how much
the managers would have to invest now at a given rate of interest to earn these
future cash benefits. The present value of the total cash outflows is compared to
that of the total cash inflows to calculate the net present value of the project.
The project with the highest positive NPV will be chosen.

 If the NPV is positive – cash benefits exceed cash costs – this means
that the project will earn a return in excess of its cost of capital (the rate
of interest/discounting used in the calculations).

32
  If the NPV is negative, this means the cost of investing in the project
exceeds the present value of future receipts, and so it is not worth
investing in it.

3. Financial statement

Financial statement analysis is the process of analyzing a company's financial

statements for decision-making purposes. External stakeholders use it to
understand the overall health of an organization as well as to evaluate financial
performance and business value. Internal constituents use it as a monitoring tool
for managing the finances.

In general, financial statements are centered around generally accepted

accounting principles (GAAP) in the U.S. These principles require a company
to create and maintain three main financial statements: the balance sheet, the
income statement, and the cash flow statement. Public companies have stricter
standards for financial statement reporting. Public companies must follow
GAAP standards which requires accrual accounting. Private companies have
greater flexibility in their financial statement preparation and also have the
option to use either accrual or cash accounting.

4. Valuation

33
A relative valuation model is a business valuation method that compares a

company's value to that of its competitors or industry peers to assess the firm's

financial worth. Relative valuation models are an alternative to absolute

value models, which try to determine a company's intrinsic worth based on its

estimated future free cash flows discounted to their present value, without any

reference to another company or industry average. Like absolute value models,

investors may use relative valuation models when determining whether a

company's stock is a good buy.

One of the most popular relative valuation multiples is the price-to-

earnings (P/E) ratio. It is calculated by dividing stock price by earnings per

share (EPS), and is expressed as a company's share price as a multiple of its

earnings. A company with a high P/E ratio is trading at a higher price per dollar

of earnings than its peers and is considered overvalued. Likewise, a company

with a low P/E ratio is trading at a lower price per dollar of EPS and is

considered undervalued. This framework can be carried out with any multiple of

price to gauge relative market value. Therefore, if the average P/E for an

industry is 10x and a particular company in that industry is trading at 5x

earnings, it is relatively undervalued to its peers.

34
Recommendations:

If you want to work in financial planning and analysis (FP&A), investment

banking, private equity, or corporate development, you’ll need a plan on

how to improve your financial modeling skills. Your plan should include

taking online courses and training, reverse engineering other people’s

models, and building your own models in Excel. The best way to learn

financial modeling is to practice.  It takes years of experience to become an

expert at building a financial model and you really have to learn by doing.

Reading equity research reports can be a helpful way to practice, as it gives

you something to compare your results to.

35
 References/Bibliography

 https://www.investopedia.com/terms/f/financial-statement-

analysis.asp

 https://trainings.internshala.com/

 https://www.wallstreetprep.com/knowledge/financial-modeling-best-

practices-and-conventions/

 https://www.blog.mindcypress.com/excel-financial-modeling/

 https://revisionworld.com/a2-level-level-revision/business-studies-

level-revision/accounting-finance-marketing/investment-decision-

making

 https://corporatefinanceinstitute.com/resources/knowledge/modeling/w

hat-is-financial-modeling/

 Behal, Ambika (10 November 2016). "India Is Getting Its First

Generation Of Interns Thanks To This Online Startup". Forbes.
Retrieved 27 April 2017.

  "Internshala Bridging the Academia-Industry Gap". Retrieved 3

November 2018.
  Dasgupta, Brinda (20 September 2017). "Internshala launches 'India
Employed' to help graduates find their first job". The Economic Times.
Retrieved 25 March 2018.

36
  Maheshwary, Pooja (19 September 2011). "Now log on for
internship". Hindustan Times. Archived from the original on 5
September 2012.
  Sharma, Adamya (4 April 2016). "On the hunt for work in India? Try
these job portals with a difference | Digit.in". Digit. Retrieved 27
April 2017.
  Dwivedi, Vinay (30 January 2017). "Looking for an internship? Online
startup Internshala can help". The Economic Times. Retrieved 27
April 2017.
  Kumar, V Rishi (7 August 2016). "Telangana skills academy,
Internshala tie up to support student internship". The Hindu Business
Line. Retrieved 27 April 2017.
  "TEAMINDUS Sparks International Race Can Beer be Brewed on
Moon". Business world. 5 January 2017. Retrieved 27 April 2017.
  "NASSCOM 10k Startups". F6S. Retrieved 27 April 2017.
  Kurian, Anu (18 August 2015). "The Spotlight is back with a
bang!". People Matters. Retrieved 27 April 2017.

37
 ANNEXURE

QUESTIONNAIRE

1). Fill your Details Below

Name Responses
Organization
Age
Email

2). Do you know about Financial Modeling and valuation?

Option Responses
Yes
No

3)/Do you have basic knowledge of Ms Excel?

Option Responses
Yes
No

4). Do you have any previous Experience in making financial decisions?

Option Responses

38
 No experience
1 to 2 years
2 to 4 years
4 to 6 years
More than 6 years

5). Have you ever used investment decision techniques?

Option Response
Yes
No

6).Which of the following techniques have you used?(if any)

Option Responses

Payback period
method
Accounting rate of
return (ARR)
method

39
 Discounted cash
flow (DCF)
method

7). Will you recommend Financial modeling and valuation to other people?

Option Responses
Yes
No

40