However, the PSM is separate from the scored exam, so a structured CFA Level 1 prep course should remain the foundation of your overall study plan. For candidates interested in investment banking, private equity, equity research, corporate finance, or other modeling-intensive roles, the Financial Modeling PSM may be one of the most directly applicable Level 1 options.
But what actually happens inside the module? How advanced are the Excel skills, what type of financial model will you build, and how useful are the skills outside the CFA Program?
This walkthrough breaks down the CFA Financial Modeling PSM step by step so you can understand what you will learn, what you will build, and whether the module aligns with your career goals.
CFA Financial Modeling PSM at a Glance
- Time to Complete: Approximately 10 to 20 hours.
- Primary Tool: Microsoft Excel.
- Core Skill: Building and working with an integrated three-statement financial model.
- Prior Experience: No advanced financial-modeling experience is required. Familiarity with Level 1 Financial Statement Analysis is helpful.
- Assessment: Completion-based. The PSM does not contribute to your CFA exam score.
- Deadline: You must complete and submit an eligible PSM before the results-release date for your exam window.
- Availability: Financial Modeling is currently a Level 1 PSM.
What is the Financial Modeling PSM?
The CFA Financial Modeling PSM is designed to help candidates apply financial-statement concepts in a practical Excel environment. Instead of working only with formulas and ratios, you learn how financial statements, assumptions, forecasts, and supporting schedules interact within an integrated model.
The module introduces professional financial-modeling practices and shows how analysts organize assumptions, historical financial information, forecasts, and supporting schedules in Excel.
Do I Need Advanced Excel Experience?
No. The module is designed for candidates who do not already have advanced financial-modeling experience. You will learn professional spreadsheet-design practices, model structure, formatting conventions, and Excel techniques that can improve modeling efficiency.
A basic understanding of financial statements will make the module easier to follow, which is why CFA Institute recommends familiarity with Level 1 Financial Statement Analysis.
Master the CFA Curriculum First
Step-by-Step Walkthrough of the Curriculum
The module combines instructional content with guided financial-modeling exercises. You work through the model progressively, applying Excel techniques and financial-statement concepts as you go.
Part 1: Excel Best Practices & Formatting
Before you forecast a single number, you have to learn how Wall Street formats spreadsheets.
- What you do: You will learn the standard color-coding rules (e.g., blue for hardcodes, black for formulas, green for links to other sheets). You will also practice essential keyboard shortcuts to speed up your workflow and reduce reliance on your mouse.
Part 2: Building the 3-Statement Model
This is the absolute core of the module and the most important skill for any junior analyst.
- What you do: You will take historical financial data and build out the Income Statement, Balance Sheet, and Cash Flow Statement. The key lesson here is integration. You will learn the mechanics of linking Net Income to Retained Earnings, pulling Depreciation into the Cash Flow Statement, and ensuring your Balance Sheet actually balances.
- The Goal: Building a dynamic model where changing one revenue growth assumption automatically flows through all three statements without breaking the model.
Part 3: Forecasting & Valuation Basics (DCF)
Once the historicals are built and the statements are linked, you move into the future.
- What you do: You will build a revenue schedule, project future capital expenditures (CapEx) and depreciation, and forecast working capital. Finally, you will use these projections to build a basic Discounted Cash Flow (DCF) model to determine the intrinsic value of the company.
How Financial Modeling Fits into Levels 1, 2, and 3
The CFA Institute allows you to build on your skills as you progress through the three levels of the charter.
- Level 1: The standard Financial Modeling module (the 3-statement foundation).
- Level 2: If you took Financial Modeling at L1, you can step up to the Analyst Skills module at L2, which focuses on using models to make actual buy/sell recommendations.
- Level 3: At the final level, candidates can choose Advanced Financial Modeling, which introduces more complex scenarios, or shift focus to Portfolio Construction.
Why Choose Financial Modeling for Your Career?
If your goal is to work in Investment Banking, Private Equity, Corporate Development, or Equity Research, you must choose this module.
The Financial Modeling PSM can help you develop practical Excel and modeling skills, but it should not come at the expense of your exam preparation. Prioritize the tested curriculum, review sessions, mock exams, and CFA sample questions, then plan enough time to complete and submit your PSM before your results are released.
Next Steps & Strategic Timing
If you are aiming for a traditional corporate finance or banking role, the Financial Modeling PSM is the best investment of your 15 hours.
Strategic Tip: Do not let this module distract you from studying for your actual exam. The core curriculum is still the hardest part of the CFA program. The best strategy is to take your CFA exam first, and then use the 5 to 7-week waiting period before results are released to complete your Excel model.
Ready to Prepare for CFA Level 1?
Frequently Asked Questions (FAQs)
The Financial Modeling PSM does not have a separate scored final exam. The module uses videos, knowledge-check questions, guided practice, and hands-on modeling activities. To satisfy the PSM requirement, you must complete and formally submit the eligible module before your exam results are released.
Building an integrated model often requires troubleshooting when assumptions, schedules, or financial-statement links do not flow correctly. The module teaches common financial-modeling problems and how to build models that are easier to audit and troubleshoot. Follow the guided exercises closely and use the learning resources provided within the module if your model does not reconcile.
No. The Financial Modeling PSM is a separate completion requirement and does not contribute to your CFA exam score. The hands-on Excel and modeling exercises are completed within the PSM rather than tested as part of the scored Level 1 exam.
You can choose among the PSM options available for your exam level, subject to CFA Institute’s current module availability. Whichever module you choose, you must fully complete and submit at least one eligible PSM before exam results are released.
