Financial Modeling, Forecasting and Risk Management

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.