The Advanced Financial Modeler (AFM) exam is a four-hour, hands-on assessment designed to evaluate a candidate’s ability to build a 3-statement financial model of a company from scratch under time constraints.
Success on the exam is about preparation, structure, and composure.
The following guidance reflects feedback received by AFM candidates who have passed the exam.
1. Begin with a Plan…Before Opening Excel
A common mistake that candidates make is to start to build their model without first understanding the problem they are being asked to solve.
Before opening Excel, take time to read the Case Study and:
- Identify the primary question
- Understand the required outputs
- Note any areas of complexity or risk
Successful candidates typically spend 10–15 minutes reading the case materials carefully and sketching a high-level model structure. This time may prevent rework later in the exam.
2. Manage Time Deliberately
The most typical reason that candidates do not pass the AFM exam is that they run out of time.
One effective approach is to think in phases rather than focusing on individual worksheets.
A typical structure may include:
- Initial setup: formatting, assumptions, and model structure
- Operating forecasts: revenue, costs, and operating expenses
- Supporting schedules: fixed assets, depreciation, taxes, and debt
- Statement integration: linking income statement, cash flow, and balance sheet
- Review and validation: scenario checks, balance verification, and error review
Timing will vary by candidate, but having a framework helps avoid over-investing time in one area at the expense of others.
3. Use the Keyboard, Not the Mouse
Learning to use keyboard shortcuts, rather than relying on the mouse, allows you to work faster and make fewer errors.
Key shortcuts commonly used during the AFM exam include:
- Ctrl + [ to trace cell references
- F5, Enter to return to the original cell
Ctrl + \ to identify inconsistent formulas within a range
Candidates are encouraged to customize their Quick Access Toolbar (QAT) in advance with frequently used functions such as Paste Values, Trace Precedents, and border formatting.
TIP: You can learn how to set up your QAT in this FMI video.
4. Use Clear and Consistent Formatting
While the AFM exam assesses whether a model works, it also evaluates if it is easily usable and understandable.
You can use your own formatting conventions, but FMI recommends conventions most commonly found in industry:
- Blue text for hardcoded inputs
- Black text for formulas
- Green text for links to other worksheets
Watch out for unintended formatting issues. For example, white text on a white background can hide placeholder values and lead to errors. You can zoom out on your entire worksheet to help identify issues early.
5. Troubleshooting Your Balance Sheet
Balance sheet discrepancies are common, particularly under time pressure. These errors are usually the result of a small number of identifiable issues, including:
- Incorrect sign conventions in the cash flow statement
- Working capital changes reflected on the balance sheet but not in cash flow
- Dividends or financing items recorded in equity but not in cash
TIP: FMI ran a video series on “The Top 10 Reasons Your Balance Sheet Won’t Balance.” You can find those videos on FMI’s YouTube Channel.
6. Follow the Exam Rules
Candidates should ensure their exam setup complies fully with FMI’s proctoring requirements:
- Only one monitor can be used
- The proctoring software must be installed and tested in advance
- Macros and add-ins may be used for formatting or auditing, but not to automate model construction
These checks should be completed before Exam Day to avoid preventable disruptions.
TIP: Here is a list of answers to candidate FAQs.
7. Review Your Work
Take a few minutes at the end of the exam to confirm:
- All hardcoded inputs are clearly identified
- Balance checks equal zero across all periods
- Key assumptions flow correctly through the model
- The model could reasonably be reviewed and used by another professional
A brief review often catches issues that would otherwise go unnoticed.
Final Perspective
The AFM exam is not designed to trick candidates. It is designed to assess whether a candidate can apply sound modeling practices under realistic constraints.
Errors will occur, and schedules may need to be revisited, and that is expected. Successful candidates do not need to submit perfect models; they need to demonstrate modeling discipline, sound structure, and the ability to work methodically under pressure.
