Basic corporate analysis and valuation, whether for one’s own company or its investments, usually relies on the creation of a dynamic discounted cash flow model. Building one from a blank worksheet, using someone else’s, or trying to manipulate one that is already created is difficult without a thorough knowledge of technical spreadsheet skill and solid financial concept understanding. This course provides participants with a thorough understanding of every component to building and using a powerful discounted cash flow model. In addition, major concepts are expanded upon to ensure that the assumptions being used are correct and the modeling is completed in the most accurate way possible.

Learning valuation and modeling is best done with a combination of theory, demonstration, and hands-on practice. Each section below is designed in such a way. Almost all exercises are Excel based and contribute to understanding a fully functioning, dynamic model.

##### Introduction to Corporate Modeling and Analysis

I. What is Financial Modeling?

II. Why Professionals Build Models

III. Which Models to Implement

IV. Basic Model Layout and Design

Working with a Bad Model

##### Building a ToolKit

I. Time Value of Money Functions

II. Mathematical/Statistical Functions

III. Logical Functions

IV. Lookup Functions

V. Naming Ranges/Data Validation Lists

VI. Function Combinations

Time Value of Money Functions

Mathematical/Statistical Functions

Logical Functions

Lookup Functions

Naming Ranges/ Data Validation Lists

##### Scenario Selectors: The First Step in a Model

I. Overview of a Scenario Selector

II. Specific Scenario Selector Setup & Use

*Exercise: Scenario Selectors*

##### Dates and Timing: The Framework for a Model

I. Overview of Dates and Timing Set Up

II. Specific Date and Timing Functions and Organization

*Exercise: Dates & Timing*

##### Core Concepts: Revenue and Cost Build

I. Overview of Using a Bottom Up Methodology for Revenue and Costs

II. Fixed Costs vs. Variable Costs

*Exercise: A Bottom Up Approach*

III. Integrating Revenue and Costs into a Model

##### Core Concepts: Capex and Deprecation

I. Capital Expenditures: Setting up a schedule for CAPEX

*Exercise: CAPEX Schedules*

II. Depreciation Calculations

*Exercise: Depreciation Functions & Methodology*

III. Integrating Capex & Depreciation into a Model

##### Core Concepts: Current and Long-Term Liabilities

I. Basic Fixed Rate Amortization

*Exercise: Amortizing a Fixed Rate Loan*

II. Floating Rate Amortization

*Exercise: Amortizing a Floating Rate Loan*

III. Revolving Credit Facilities

*Exercise: Setting Up All Aspects of a Revolving Credit Facility*

IV. Integrated Debt into a Model

##### Core Concepts: Equity

I. The Various Forms of Equity Ownership

II. Calculating Share Ownership

*Exercise: Calculating Equity Ownership by Type*

##### Core Concepts: Working Capital

I. What Working Capital is and Why it is Important

II. The Cash Conversion Cycle

*Exercise: Calculating Working Capital from the Cash Conversion Cycle*

*Exercise: Calculating the Net Change in Working Capital*

##### The Financial Statements: Connecting Everything

I. Income Statement, Balance Sheet, and Cash Flow Statement

II. How Each Statement Draws from the Core Concepts, Calculates, and Connects

##### Discounted Cash Flow Valuation

I. Free Cash Flow to the Firm (FCFF)

*Exercise: Calculating FCFF in the Model*

II. Free Cash Flow to Equity (FCFE)

*Exercise: Calculating the FCFE*

III. The Cost of Equity, Cost of Capital, & WACC

*Exercise: Calculating the Correct Rates*

IV. Calibrating Other Discounts: Size, Liquidity, Sovereign, and Control Risk

V. Terminal Value: Various Methodologies & Calculations

*Exercise: The Differences & Sensitivity of Terminal Value Methods*

##### Model Integrity: Ensuring Everything is Correct

I. Building Checks into the Model to Make Sure Calculations are Correct

II. Balancing the Balance Sheet Automatically

*Exercise: Balance a Balance Sheet*

III. Cash Checks

##### Output Reporting: ensuring Everything is Understandable

I. Changing the Periodicity of Results

II. Building Snapshot Views

III. Relevant Metrics and Ratios

IV. Charting

##### Capital Structuring Applications

I. Setting Up a Model for Capital Structure Analysis

*Case Study & Exercise: Optimal Debt & Equity*

II. How to Calculate the Optimal Capital Structure for a Company