(Available also for Customised Training by Duration, Venue & Fee)
(PARTICIPANTS MUST BE WITH THEIR COMPUTERS)
Programme Description
Financial modeling demands a logical, consistent approach. This workshop builds a financial analysis and a valuation model through a series of logical and practical stages.
Upon completion, delegates will have a comprehensive understanding of advanced modeling, as well as how each technique can practically be applied through:
• Building a financial model from a blank sheet
• Designing models which minimize errors
• Writing models which can be maintained and augmented in the future
• Developing models with advanced techniques such as risk, sensitivity, and optimization and forecasting.
Course Contents
DAY ONE
Financial Analysis and Valuation
• Different approaches to valuation
• Financial analysis and valuation framework model
• Useful Excel methods, features and techniques
• Common pitfalls and mistakes in Excel.
Alternative Model Review
• Model Structure and Planning
o Model design and structure – key stop
o Planning the equity valuation model
o Required sheets, calculations and DAYs
o Five essential auditing techniques.
Completing and Checking the Financial Analysis/Valuation Template
• Adding Cash Flows and Ratios
o Structured model with a menu and accounting statements
o Calculating key financial ratios
Adding Cash Flow and Ratios to Template
• Non-cash Flow Valuation
o Non-cash flow methods
o Accounting methods
o Dividend discount models
o Market-based methods – EPS and multiples
o Peer groups
• Calculating Accounting and Market Value on Template
DAY TWO
Forecasting and Equity Valuation
• Forecasting Methods
o Review of forecasting methods
o Macro forecasting
o Linear methods
o Review of historical performance
o Relationship between company and financial strategy
o Identifying and forecasting key drivers
o Linkages and modeling problems
• Reviewing Performance and Adding a Forecast.
The Case Template and Deriving Forecast
Financial Statements.
• Free Cash Flows
o Derivation of free cash flow
o Checking model results and redefining forecast
o Reasonableness of forecast and results.
o Adding Free Cash Flow to the Model.
o Cost of Capital:
o Alternative theories – bonds and arbitrage pricing theory
o Capital Asset Pricing Model constituents
o Discussion and agreement on WACC inputs
o Asset and equity betas and risk
o Mathematical derivation
• Deriving Beta from Data and Adding WACC to Case
o Initial Equity Valuation:
o Methods of adding terminal value
o Producing an equity valuation
o Comparison to existing share price
• Adding Equity Valuation to the Template
DAY THREE
Risk, Targeting and Other Layers
• Alternative Cash Flow Valuation
o Time varying WACC
o Adjustments to value
o Adjusted Present Value (APV) method
o Existence and addition of financial and operational synergies
o Reconciliation to economic profit
• Adding APV to the Template
Risk and Sensitivity
• Understanding of risk and multiple answers
o Sensitivity and tables
o Creating sensitivity graphs
o Scenario planning based on economic climate
o Alternative scenario methods
Testing the Models with Different Sensitivity
and Risk Matrices
• Optimum Structure and Targeting
o Achieving a target valuation
o Goal seeking method
o Testing valuation with leverage and structure
o Targeting the Case to Improve Valuation Sensitivity
o Management Reporting and Model Review:
o Management reporting and summary
o Suggestion for other improvements to the valuation model
o Final audit
o Help and user assistance
o Securing and protection
o Documentation and maintenance.
