Join me as I prepare for the FMI AFM exam in February 2025
Preparing for the February 2025 AFM exam
I have registered for the Financial Modeling Institute's Advanced Financial Modeler exam in February 2025. In this series I will be sharing my thoughts and learnings as I prepare for the exam.
You can catch up on my previous posts using the links below:
12 weeks to go to the FMI AFM exam
11 weeks to go to the FMI AFM exam
Here is my latest weekly update with ten weeks to go to the AFM exam.
What I covered last week
Last week was all about the income statement.
I worked through the Financial Modeling Institute's exam preparation materials on revenue, costs and also managed to cover depreciation. The Income Statement was always going to be the easiest part of the three statements, but there were some key points that I noted down for exam technique.
Let's have a quick look at the three sections.
Revenue
A fairly straightforward point: for the exam you need to be aware that revenue is the result of quantity x price and be able to separate and then forecast the two elements independently.
The price is likely to be subject to change throughout the life of the plan.
The quantity is likely to be subject to growth and also constrained by a capacity threshold in the case, so you need to be able to handle both concepts.
Variable Costs
As with revenue, for variable costs you need to be able to separate and then forecast quantity and unit costs independently.
Fixed Costs
Fixed costs should be nice and straightforward. Typically, you will just need to apply an inflation rate to given year one fixed costs.
Depreciation
Depreciation is a much more involved section of the build and will need some time if you don't already have experience modelling it.
For the exam you need to deal with the depreciation of existing and new assets separately.
You are most likely to be asked to apply straight-line depreciation, but might also be asked to apply the reducing balance method.
Existing assets are pretty straightforward as you just need to depreciate them over the remaining term.
New assets takes a bit more build effort. You are typically given a capex value for each year of the plan you you will need to build out the depreciation for each year's additions.
I'd never come across the term PP&E (Property, Plant, and Equipment) before, so it took me a moment to identify the existing fixed asset value on the balance sheet!
Week 3 - 10 weeks to go
I am now well ahead of my original plan so am moving on to Working Capital and Tax this week.
Working Capital can be a tricky area to model so I am looking forward to see how it will be tested in the AFM exam.
My plan
Below was my initial plan by topic areas. I am currently running a little ahead of this plan.
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Our core training program covers all the Excel and financial modelling skills that you need to succeed in the FMI exams.
Our FMI AFM exam Bootcamp, led by Giles Males, MVP and MFM has been designed specifically to support candidates taking the FMI AFM exam.
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What is the Financial Modeling Institute?
The Financial Modeling Institute (FMI) was founded in 2017 with the goal of “Promoting awareness, excellence and discipline in Financial Modeling through world-class accreditation programs”.
The Financial Modeling Institute (FMI) focuses on assessment, leaving the delivery of training to independent and proven partners like us at Full Stack Modeller.
What are the FMI certification levels?
The Financial Modeling Institute (FMI) has three certification levels. These are: Advanced Financial Modeler (AFM); Chartered Financial Modeler (CFM); and Master Financial Modeler (MFM).
