Course Objectives

By the end of the course, participants will be able to:

  • Apply time value of money concepts
  • Perform and interpret financial analysis
  • Apply cost of capital calculation techniques
  • Construct forecasted financial statement models and perform sensitivity analysis
  • Use the free cash flow technique in determining the value of a project or a company
  • Develop financial models using different Excel modelling techniques

Course Outline

Financial calculations: Applications

  • Time value of money:
  • Present value and net present value
  • Internal rate of return and Multiple IRR (MIRR)
  • Using XNPV and XIRR
  • Amortization of loan schedule
  • Effective yields and returns

Corporate financial analysis

  • Profit and loss versus balance sheet analysis
  • Comparable company analysis
  • Building block analysis
  • Vertical, trend, and horizontal analysis
  • Liquidity
  • Current, quick, and cash ratios
  • Asset management and activity
  • AR and AP Turnover
  • Cash conversion cycle
  • Asset turnover
  • Solvency, leverage and gearing
  • Debt, equity, and times interest earned ratios
  • Assessing profitability management
  • Profit margin, gross margin, return on assets, return on equity
  • Market and valuation
  • Price-earnings and earnings per share ratios
  • Modeling the DuPont identity
  • The three-step models

Calculating cost of capital and capital structure

  • The Gordon dividend model
  • Supernormal growth
  • Calculating cost of equity and cost of debt
  • Computing the expected return on the market
  • Computing weighted average cost of capital

Financial statement modeling

  • How financial models work
  • Modeling income statement
  • Modeling balance sheet
  • Free Cash Flow measurement (FCF)
  • Using FCF to value the firm and its equity
  • Sensitivity analysis
  • Discounted cash flow analysis
  • Developing an integrated financial model

Model construction techniques

  • Data tables design
  • Assumptions and input variable rules
  • Array functions and formulas
  • Spinner data modeling
  • List box data modeling
  • Option box data modeling
  • Acquiring and updating data from the text, access database, SQL, and the web