Financial Modeling: FMVA, DCFs, and AI in Excel with Tim Vipond

0:00And I show people how you can use Claude to build a three statement model really quickly. And it's actually like shockingly good. And then we also use it for error checking. And like I show how you can use Claude in Excel to audit a model. And it perfectly found every single error that we inserted into the model, which was quite awesome. So, yeah. So if you're doing like your own modeling, like your audience is into stock picking and you're building your own model, you can use Claude in Excel to review your model, give you feedback. find any errors, so on and so on. You're tuned in to the Investing for Beginners podcast.

0:36Investing for Beginners podcast. The show for the long-term investor. We cut through the noise to focus on what works. Compounding, discipline, and the conviction to buy wonderful businesses and stick with them. Your path to financial freedom. Start now. Welcome to the Investing for Beginners podcast. I have another great guest for us today. I have Tim Vipon, the co-founder and CEO of CFI. Just a side note, a lot of the ways I've taught myself in the past about different CFA type topics and finance and modeling has been from your website. So I know this will be a very fun conversation. Thanks for joining us, Tim.

1:23Yeah, thanks. My pleasure to be here. Looking forward to it. Awesome. So can we start at the beginning? Like, what gave you the idea to start a website like this? Did you see a pain point? Or were you just following your passion? How did that look? Yeah, great question. There's a few ways to talk about it. But the first is that I'd had a career in corporate finance for over a decade, had worked in investment banking, wealth management, corporate development. So, you know, that was that was my career, if you will, up until the point where I started CFI. But I actually got into it because I wanted to initially work on my public speaking.

2:03And I thought the best way to work on public speaking was to teach a course to a live audience. So I went to a local university in Vancouver and taught a financial modeling course. And that went well, I enjoyed it, got good feedback. And one thing led to another, And I got introduced to my co-founder, which was MDA training, a professional like investment banking classroom training company. And they wanted to start an online offering. And I was working at shoes.com at the time. So my head was in the SEO and, you know, digital marketing space. And we came together and launched CFI in 2016. So we just had our 10 year anniversary this year.

2:45and um so that that's like how it initially got going and then of course there was like a whole a whole uh big push into seo and all sorts of other things like after we launched the business what were you wanting to be good at public speaking for was it just like a random skill you're like oh let me try this yeah no actually yeah good question it was because i thought But look, I wanted to be, say, a CFO or CEO of a big company. I noticed that most of the C-suites in big companies are great at delivering talks or public speaking in some form or another. And I had to do a couple of IR-type presentations that I just didn't feel prepared enough for, that I felt pretty nervous about.

3:38I didn't think I delivered it that well. So I thought, okay, I got to go work on this. That's why. Nice. Did you ever think you would be an entrepreneur? Well, I liked the idea, but I wasn't really planning to. I was working, trying to work up the corporate ladder more so. So I got to be a VP of finance and I thought, okay, maybe I can figure out a way to CFO or something. I thought entrepreneurship looked super exciting, but I got, luckily this came along. at just the right time. And then I was sort of thrust into it. Yeah, very cool. What about, you mentioned like the course you taught or some of the topics you taught there and which ones like resonated really well with students.

4:28So it was a valuation course on how to value a single asset mining company. So we valued the asset a few different ways first is we built a discounted cash flow or dcf model um and in mining you model the whole life of the mine out so you build this like 15 or 20 year cash flow model and calculate the npb and then we also looked at comparable company analysis so we showed them how to like find um comparable companies calculate the multiples or ratios for those and then compare them you know to to see what it could imply for this for this company and this asset so we took together the dcf and the comps and you know had it had a good discussion of like what we thought it might be worth paying for paying for it yeah that's cool but so for a mining company like that is there no terminal value like usually a terminal value you're assuming the indefinite but in this case because it's a mine and it runs out yeah that's exactly right yeah exactly right so there's no so no terminal value and in fact the really the only thing you have at the very end is actually like a negative cash flow or negative terminal value through through some sort of maybe environmental liability you know that could like sit at the end of it so um you're really just looking at how much cash flow you can get over the life of that mine and that's it you can extend mine life too though so like you know there could be some more actually at the end there could be some residual value or terminal value if you're going to keep exploring and extending the mine life yeah what are some of the things that go into that that people don't think of um i mean in my mind like i've never i've never thought to run something that's always been indefinite so um are there that falls there or what is that well the reason you do it this way in mining is because there are these technical reports that are produced by engineers and geologists like feasibility studies or so on right and they they have this detailed mine plan that tells you like how much ore you're going to extract from the ground each year uh you have to get through all the resources in the mine so that since you follow that plan typically unless you want to have your own unique view on it uh right you'd follow that plan um so that's what's a bit unique about it versus like a regular business let's say where um you know you're like probably going to forecast five maybe 10 years into the future you know given how hard it is to know the growth profile of an operating company.

7:19Yeah, so you guys have, it's called, I don't want to butcher it, FMVA. Yeah. Is that, within that is, what are the modeling skills that you learn as part of that? And maybe you can explain what that is for our audience who doesn't know what that is. Sure. Yeah, so FMVA stands for Financial Modeling and Valuation Analyst. This is the flagship credential that we created, and it focuses, as the name sort of implies, on financial modeling evaluation. And we teach discounted cash flow or DCF modeling, comparable company analysis, which are like public multiples, and then precedent transactions, which are M &A transactions that happened in the past.

8:06These are the three most common valuation methods. And then you look at all three together and you sort of triangulate, you know, based on those to come up with your own view of valuation. that's that's the bulk of it and that involves a lot of excel work a lot of um but also a lot of accounting um quite frankly that's one thing that surprised me you know in initially getting into financial modeling was um how much how much accounting knowledge you really need to have to build a good model so so we also teach accounting economics finance uh and some business strategy too because i you know like to have a an interesting view let's say on a company i think you need to be thinking a lot about business strategy so so those are a bunch of the things that we bundled together into a nice curriculum and online program that you can earn that fmba certification through that's awesome how long does it typically take somebody to to earn it people usually spend six to twelve months on it working part-time on it right so So maybe 50 to 100 hours of time to get through it.

9:18Do you think there's anything that in that first course you taught that has evolved or, you know, you could have taken and applied to some of the things that you teach in the in the certification? Yes, for sure. That was one of the first courses that I actually then converted into an online course. and a lot you know a lot of the principles from that have made their way into other courses that that we've developed as well yeah absolutely do you find um like how is accounting for you i think everybody has a certain unique relationship with accounting so i guess you can you came from a background um you know investment banking things like that um what how was that relationship for you when you first started?

10:10Well, for me, initially, it was actually quite difficult because I did my undergrad degree at Dartmouth College in liberal arts. So I was pretty unprepared for like, hardcore financial analysis, I had to like learn a lot of it on the job and studying on my own, which actually was a big part of the inspiration for me in creating CFI, because sort of created a product that I knew that I would have benefited from when I was starting out my career. But initially for me, accounting was a little bit difficult. Some of it was counterintuitive. Like if we're talking about debits and credits and things like that, I actually find all that, you know, not completely intuitive.

10:54But when we're looking at financial statements, I do find that to be fairly intuitive. So we don't really spend any time at CFI talking about debits and credits or double entry or anything like that where people's eyes normally glaze over. Like at least we're we're focused on the accounting as it relates to financial statements. So accounting policies. Right. And, you know, figuring out what goes where essentially in the financial statements and how to get from accounting numbers to cash flow numbers. That's really like the big thing in finance. It's like taking the accounting metrics and get to the cashflow metrics, cashflow being what we really care about at the end of the day.

11:32But of course, understanding why we need to represent it in an accounting format. You know, simply having a cashflow statement wouldn't really do either. So you do need both. The way they connect, like you're saying the three statements connect, there was a, it took me a long time to like have that realization or that flip moment. And it took like a visual. So having a course or a resource, like what you guys offer is a type of thing I think, because it's not, it's intuitive, but it isn't like, it's, it's a, it's a weird thing. Cause there's so many metrics. For sure. For sure. And that's why Excel is so helpful because like if, if you were, I don't know, learning out of a textbook or listening to a lecture and someone was explaining to you how like net income from the bottom of the income statement ties in um you know to uh the cash flow statement or into the balance sheet okay like it's not when you link it in excel you really see how things flow and move around with the formulas of linking so um that to me is the best way to learn the accounting of the statements is to is to go into excel and connect it all up.

12:49And so that's, that's, that's a pretty big focus in the FMBA program. What would you say to somebody who's a beginner and they're like, I don't like numbers, I don't like accounting, but maybe they still want to learn, but they just feel overwhelmed. Do you have any ideas on how they can get over that hurdle? Hmm. Well, if you have a business that you feel you understand, that's, that's what I would begin with so whatever that business is um could be mining company if you're from the mining world or software or product or e-commerce whatever it is that you understand that business at least start there with those financial statements of that business that you already understand and see if you can work work through what they're doing um read the notes if you can bring yourself you know to read the notes that's extremely helpful though people often don't take the time to do it but but the notes explain pretty well like what they're doing how they recognize revenue and what they capitalize or don't capitalize or how they categorize stuff so if you like if you don't like numbers but you like reading at least read the notes then and read read the mdna the the management discussion analysis and like that you know i think just doing that will actually shed quite a bit of light.

14:13That's awesome. Can always get behind the idea that go read the 10k. Something to talk about. Yeah. Okay. There you go. So like, but yeah, but like the front of the 10k, like the, the business strategy and stuff is going to be like the most interesting probably. And then people might drop off before they get to the actual accounting notes, but try to stick with it if you can. Yeah. That's funny. Uh, somebody we quote all the time on the show, Warren Buffett, he says, uh, um, being a business person has made me a better investor and being an investor has made me a better business person. Are there lessons from your time as founder that has taught you something about the way other businesses work?

14:59Um, so lessons from your business to the general business world. Um, yeah, first of all, that's a great quote. I can really see how that's true. The main lesson that I've learned is being an operator. Well, there's a lot of things, but the first is having an understanding of the value drivers or the growth levers in your business. Like, what are the things you really need to do that drive growth? And what are the things that are not so necessary? And once you once you figure out what drives growth, investing, whether it's like capital, people, whatever type of resource you can invest into that thing that gets you your ROI.

15:48So that's one thing. Another thing is being as cost conscious as possible is really important. So like we've always been profitable as a company. It's just like a philosophy I've had of maybe a bit Buffett-esque, right, in that sense. And if you have that approach or like that framework, that mental framework, you really can operate that way. It's sort of like a choice, I think, in many ways. And then there's people who like to run businesses that like, you know, negative, negative margins and always raise money. And then that's a different, you know, that's a, that's a different game you're playing, but I'd rather not have to keep raising money, stay profitable and operate with discipline.

16:39So, so that's how we operate. That's cool. Any like mistakes that were learning lessons for you along the way? and how long so you said 2016 yeah um world's kind of changed since then a little bit yeah oh yeah like lost trying to do what we did 10 years ago now i think would be a totally totally different game i'm not sure it would be doable right now i think like we you always benefit from timing but um content marketing was like how we got started so youtube and SEO, like blogging essentially, right? Back when it was, it was much less competitive then. And there was a lot of opportunity for us to grow quickly that way.

17:27I think that would be a lot harder right now. Social media probably would play a lot bigger role in terms of distribution. Now, AIO, as they call it now, like getting recommended from AI platforms is also like big now so yeah a lot of things have changed um but sorry you were asking me about like lessons yeah like any hard hard-earned lessons that were mistakes but you're like oh we came out on the other side yeah i think i think the biggest things were like hiring okay hiring is super important so making sure you have the right people on the team but then as the business grows especially if it's a high growth business sometimes the people don't grow at the same pace and then you need to decide to either bring in someone else that has more experience to to fill that gap um you know or or you have to try to grow the people you've got or or unfortunately sometimes like exit people so figuring all that part out i'd say is is one of the hardest parts And definitely were some some learnings for me there on how to do all that, you know, and how to be a good operator as you go from like a team of, I don't know, 10 people where you are directly involved in doing everything.

18:50We're not huge, but now we're a team of 50 people. And like, so, you know, I need to work on communicating through a leadership team and having that cascade down and not being directly involved in everything. Like that's been another area of a lot of learning for me. That's awesome. It's inspiring to hear your story. And I know there's probably at least one entrepreneur out there who maybe has their own idea and they should totally go for it. One of the great things about your guys' website is, I mean, you're still, when you Google stuff, your website still shows up all the time. So how have you guys maintained this high quality that it's become a really reliable source for people when they have questions about, you know, accounts receivable or cash flow or whatever, like your websites, almost always one of those really highly recommended resources.

19:49So how'd you guys do that? Yeah, great question. And so 10 years ago, things were a little different in the SEO and content world in terms of like how competitive it was. Investopedia was the biggest site in the space. And in those early days, like a lot of things like say Googling AR, like you just said, accounts receivable, you might have gotten a single paragraph result from Investopedia or maybe two or three paragraphs, pretty bare bones. and the game in seo is just writing better content so we focused on just um writing much more thorough explanations including examples images diagrams screenshots videos like just really really trying to one up uh and we were able to do that because of our course content so we we quickly figured out that look we've got all this information um in in extremely high quality material, let's call it through the courses, because in the courses, we have to make diagrams, we have to give explainers, demonstrations, and so on.

20:59So we realized, okay, let's take all the course content, and like, and, you know, sort of disaggregate it into all these blog posts, so that we're like leveraging existing material. So that was a big part of it. And then that proved to be good content, people liked it. And so it rose in the rankings and stuff. But now Investopedia has gotten a lot better too, and everybody's gotten better. So now I think you've got really good search results, which is nice, nice for people these days. And then of course, now you can just go to AI as well and get the AI version of it if you prefer that too. Yeah.

21:38With your background investment banking, do you have advice on people who are looking to break into that or think they might have an interest? Maybe they're younger or even maybe thinking of like a career shift later on in their life. Do you have advice for those types of people in those situations? Yeah, sure. There's a number of things, I think, depending on if you're coming up through college or university into your first job or if you're transitioning. In college or university, focusing on extracurriculars, like getting involved in an investment club, doing some of your own investing, perhaps doing some of your own financial modeling, incorporating that into your resume, and then networking.

22:29So like getting somehow connected to people at the types of firms you want to work at by any means you can. And I think that plays a big role in the hiring process if you know people. Excuse me. So that's good to do. And then if you're already like working in industry, you know, similar, similar with the networking angle, like definitely connecting with people and getting to know people at companies that you want to work at, understanding what they care about, the type, the types of analyses they do or the types of clients they serve. and then doing everything you can do to just like learn the skill set of the job, get connected to people and get hired through through someone, you know, I would say that's like the best way to do it.

23:20Otherwise, you're just in like, you know, a huge applicant pool of resumes of people that, you know, if they don't know you, it's kind of hard to stand out unless you're going to be like a top GPA or absolute top performer, you know, at a top company like that that's sort of the other way to go that's it's um good advice and something you don't necessarily always think about i know at least for me if i have somewhere i want to go it's like all right let's take the tactics um what you're saying is don't just focus solely on the accounting or the financial statements or the knowledge it's also getting out there um i think that's very very insightful and standing out so like whatever whatever means you can do to differentiate right like but but like you said though you do need the knowledge you do need to work on your technical skills make sure you have that down and then see what you can do to stand out um yeah do you buy uh individual stocks for fun every once in a while or are you more of index guy?

24:26Not, not too often. Like I'm pretty focused on the asset mix that we've got as a family. And like, I've, I've looked to the endowment model a fair bit in designing that. So that includes private equity, public equity, private debt and public debt and some alternatives. Okay. So like, I'm focused on that. And then we work with some groups that, that manage money. I love the idea of picking stocks like i wish i had the time you know maybe if i wasn't running cfi i would uh try to take the time to do that because i think it's it's super interesting and fun but i'm not yeah my stock picking days are probably still a bit down the road so we talked um what other courses you guys have um we talked about the the certification but are there other ones that you find that people gravitate towards?

25:19Yeah. We, I mean, we've got a huge range of courses. We have 250 in the library, every, you know, topics that are quite popular include like data visualization. So we've got courses on charts and graphs and like how to essentially tell a story with data and visuals. That's quite popular, especially for people that want to work at an operating company, like in financial planning and analysis. We've got courses on business partnering. So like if you're on the finance team, how do you work with marketing and operations and HR to help those functions? We've got courses on AI for finance professionals.

25:59So actually recently launched one that I'm the instructor in, which is not as common these days, but it's on AI financial modeling with Claude in Excel. and I show people how you can use Claude to build a three statement model really quickly. And it's actually like shockingly good. And then we also use it for error checking. And like we, I show how you can use Claude in Excel to audit a model. And it perfectly found every single error that we inserted into the model, which was quite awesome. So yeah. So if you're doing like your own modeling, like your audience is into stock picking and you're building your own model you can use cloud and excel to review your model give you feedback find any errors so on and so on so that's a an area of rising interest for sure wow um have you been following clod and all the developments in ai for a while now sort of it only really impressed me um i would say i think it was around february this year february of 26 when they came out with things like sonnet 4.6 or whatever it's called um as actually being amazing in excel and then prior to that um i i was never super impressed with what these products were able to do at least in excel right so so now i'm paying a lot more attention to it and i think it is gonna have a big impact on the way financial analysts do their work um but i think it'll it's gonna be a positive impact I don't think it's going to replace people.

27:35I just think it's going to make people a lot more productive. That's cool. I think you can have that extra set of eyes to audit and see if you made any mistakes just with the click of a button. Yeah, it's pretty incredible. Yeah, the prompt doesn't need anything special. You could literally just say like review my model. We did upload to it, though, our financial modeling guidelines. I think you can actually just pull it off our website somewhere for free. But essentially these it's like a PDF of 100 pages that just outlines all the best practices for financial modeling. So I uploaded that to Claude and I said, read this whole thing and follow these guidelines and find all the errors in the model.

28:16And then it did. Wow. So when you say kind of like assembling, what does that mean? Like it assembles just how how how. How in depth does it go? like how much human interventions needed when you say like you did you say it could just build you a model just from scratch or yeah it could do all the form yeah it can i mean it's pretty good like you can some people on our team have been playing around with um a demo that we want to produce which is like hey we literally say go get uh walmart's 10k and get the 10k get all the numbers out of it put it into excel build a five-year forecast and calculate a dcf and it'll basically like do that whole thing like in a pretty impressive manner um but but so so that doesn't give it much uh structure though if it's like that open-ended and you know it's it's a good start but it's not quite what we would want to see the way we teach things so so what we did instead though was we uploaded some of our own templates and we said, Hey, like use this template.

29:26This is how we like to see the three statements laid out or DCF calculated, um, and then build the forecast and it can calculate all the formulas you need to build the forecast. So you, even some of the complicated ones, like working capital schedules that, right. That then impact the cashflow statement in the balance sheet. And like, it would make, it could make all the schedules, calculate all the stuff. It was, yeah, it's pretty cool. I guess as an instructor, are there ways that people use AI or view AI that you feel like is misunderstood? Not misunderstood is not the right word, but maybe they're handicapping themselves by thinking or using AI a certain way.

30:11Well, okay. My sense is that unless you're going out of your way to correct for this, but generally AI is going to give you a consensus view, consensus approach. My understanding, what you want to do as an investor is have your own unique perspective, right? It might be a bit non-consensus. It might be informed by some special knowledge you have about an industry or a company or whatever. and then you bring that unique view that forms your investment thesis. Like that's why you think this company is going to way outperform what the market expects it to do. So I haven't seen, maybe it'll become possible for AI to like do that as well, but I don't know where it's going to get that unique perspective from.

31:01So I think that's why still, for me as an investor, I'd like want to be investing with my own perspective on things, but using AI to help me do it. Um, so, so that's one, that's one thing I've noticed. Is this something that, um, as a CEO, are you looking at AI, um, just kind of across your company? Yeah. And in, in many different ways, actually. So like we're of course having delivering courses about how to use AI, then we're using AI to help us, um, do things more efficiently in the company, like in the way we make courses to help us research them or create some of the assets and things that go into the courses.

31:43We can do that as well. And then a third area that's quite interesting too is just like in managing the company and the people, you know, you can have AI help you like read all the Slack channels or read Asana boards and, you know, help guide you on where you might need to focus your attention in running the business. So that's quite exciting too. Tim this has been like really awesome your website and your company have done really incredible things for investors and you continue to do that on the forefront with some of the AI courses and things like that if somebody out there is motivated by what you have done you know you created this amazing educational resource for people to teach them a very valuable skill you're also kind of a content marketing slash media company, however you want to classify yourself, what kind of, uh, what would you say to somebody if, if, you know, you had a coffee with this person and the, they were aspiring to do one of these things?

32:52Yeah, great question. And I think like it has shifted over the 10 years that we've been in business as to like where you'd focus, but here's what I'd say is first of all, so you have something that you're either extremely passionate about, you know, and, or extremely knowledgeable about. That is the foundation. You have to have that first. Because you need to create the best content. So if you're extremely knowledgeable and are passionate, then you can create content and distribute that content. And I would think about all the different channels. So I would think about podcasts as an avenue for that.

33:27I would think about YouTube videos as an avenue for that. excuse me i would think about social media like linkedin um instagram facebook tiktok okay etc now initially you're probably not going to be able to tackle all of those but you i think you want to have at least a few of those channels that you're working on and taking the assets or the content that you're creating and trying to repurpose it for different channels so you can be across them all i think um the really great uh content creators of of the 2026 era of the world are doing it a multi-channel so you see podcasters that are building huge youtube channels um right and then and then getting um a sub stack audience or a linkedin audience as well and then maybe creating a community and wrapping it all together.

34:24So that's how I would think about the distribution side of it. And then in terms of the product, I think there's many different forms the product can take. You can have courses, you can have a membership to a community, can maybe build a tool, a software tool. I don't really, it sort of depends on what you're trying to create, right? but you've sort of got that product and then you've got your distribution through all those channels and i think that all fits together in a very complementary way um and you want to and then ultimately what you if if to pull it off i think you want to have a brand at the end of the day so that all those things fit together in a way that people recognize your brand and the brand could be your name for like you as a as a person or it could just be this company that you're building but either way thinking of it as a brand and like you can see some of the top podcasters in the world right that have built these brands uh essentially around themselves and i think are kind of showing showing the path forward on that so that that's what i would say and then seeing where your traction is and just doubling down like the odds of being good on tiktok and podcasting and sub stack is like probably really low.

35:41So figuring out like where the type of content you create resonates and then doubling down and doubling down on that. That's awesome. Super inspiring. Great conversation. I appreciate your time. Again, it is CFI is the company. The website is corporate finance institute.com. and the certification program is FMVA. And you mentioned it's hard to build multi-channel followings. Your LinkedIn is quite popular. I'm looking at your latest posts and it's like hundreds and thousands of comments and likes and everything. So people can also follow you on LinkedIn. Is there any other resources you want to shout out?

36:34No, thanks for that. I really appreciate it. Yeah, please check out our site. We've got tons of free stuff, tons of valuable course content. And yeah, you can follow me on LinkedIn if you want. I really enjoy LinkedIn because what we're doing is trying to help professionals advance their careers. And so that seems to be a very natural audience for us on LinkedIn. Yeah, so please connect with me on there. And thanks for having me on. I really enjoyed the conversation. I think what you've built is super cool. I think it's awesome how you're helping people hone their investing skills and perform research.

37:10And so I think it's very cool. And yeah, I hope to be picking stocks, you know, myself one of these days. But we'll see when I can find the time. Right. Or just throw a dart at the wall, right? That's always what people like to do, right? Yeah, maybe with like, you know, 1 % of the portfolio. Sure. Well, we will have you on next time when you tell us how that you found your hundred bagger and just outperformed everybody with your dart. Well, thanks, Tim. That's going to do for us today. Remember to go out there and invest with a margin of safety emphasis on the safety. Have a great week and we will talk to you next time.