Beijing

Course details

Financial Modeling - Fundamentals

Using a real company forecast model, we start the session by reviewing the structure and key components of an integrated three statement forecast model. We then focus on modeling operating cash (required cash) and separating it from excess cash. We then teach participants how to build a forecast cash flow statement from scratch, using income statement and balance sheet inputs. The last part of this session focuses on interest calculations and circularities, where we teach participants the difference between using beginning, ending or average debt/cash balances and how to work safely and effectively with or without circular formulae in a model.

 

  • Review of the structure and key components of a forecast model
  • Review of the modelling steps to build a three statement integrated model
  • Modeling operating cash (require cash) and excess cash
  • Building a forecast cash flow statement from scratch
  • Links to forecast income statement and balance sheet
  • The 4 rules of cash
  • Calculating the balance sheet plugs (cash and revolver)
  • Calculating interest on cash and debt balances
  • Using beginning, ending or average balances
  • What is a circular formula?
  • Working with intentional circular references
  • Excel settings
  • How does the iterative process work?
  • Building and using circularity switches
  • Avoiding non-intentional circular references

Financial Modeling - Cash Sweep

In this session we build a three statement operating model for a real company, which incorporates a detailed revenue forecast based on price and volume drivers. We set up a hierarchy of a series of debt items and we learn how to model the sequential debt paydown using a ‘cash sweep’ approach. Best practice modeling techniques are emphasized throughout.

 

  • Building a detailed debt schedule
  • The waterfall of debt repayments
  • Building a simple cash sweep
  • Modeling revolver
  • Modeling a price/volume revenue forecast

Valuation Fundamentals

The session lays the foundations to build a solid understanding of corporate valuation in the context of investment banking. The most common valuation methodologies are introduced, explaining the difference between a company's fundamental value, and how much an acquirer would pay for the business. The concepts of enterprise value and equity value are explained, using simple but rigorous exercises. Finally, the basics of multiple valuation and discounted cash flow valuation are introduced. Exercises are used throughout the session.

 

  • The importance of valuation in the investment banking industry
  • Fundamental vs. transaction value
  • Overview of the major valuation methods
    • Trading comparables analysis
    • Discounted cash flow analysis
    • Transaction comparables analysis
    • LBO analysis
  • Enterprise vs. equity value
  • Book values vs. market values
  • Derivation of enterprise values using market values


DCF Fundamentals

Participants will assess and calculate the unlevered free cash flows of the target company and perform a discounted cash flow analysis on the target company. The resulting value will be sensitized using data tables.

 

  • Calculating unlevered free cash flows
  • Calculating the terminal value
    • Growing perpetuity
    • Multiples
  • Introduction to WACC
  • Building a discounting model
  • Converting the enterprise value to equity value

Course trainers

Prerequisite

A good understanding of basic accounting transactions and the relationship between the three financial statements.

 

NB.

This course is non-residential. The venue will provide light refreshments. AMT reserve the right to cancel or postpone sessions or change content if registrations are insufficient to continue 2 weeks prior to scheduled commencement date. Registrants will be given at least 5 business days’ notice of such changes.