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FINANCIAL Statement Analysis & Equity Valuations:

• Foundations of Financial Modeling
• Need for Financial Models
• What is Financial Modeling
• Best Practices of EXCEL
• Understanding of Key Financial Statements (Balance Sheet & Income Statement)
• Streamlining of the Financial Statements data gathered from Third Party Sources
• Additional information from Annual Reports

Cash Flow Statements

• Preparation of cash flow statement from Balance sheet & Income Statement
• Analysis based on Cash Flow Statements
• Computation & Interpretation of Cash Flow Ratios

Ratio Analysis

• Profitability Analysis
• Efficiency Analysis
• Liquidity Analysis
• Common size Analysis
• DuPont Analysis
• Altman z-Score
• Reporting on overall Financial Health
• Valuation Ratios
• Working Capital Analysis
• Observe historical trends
• Identify determinants of earnings growth
• Measure financial strength
• Observe the link between ROE and implied growth

Forecasting Financial Statements

• Using different functions of EXCEL to forecast
• Understanding Macro economic variables having impact on Future Financial Statements
• Impact of GDP, Inflation & other macro economic variables on Equity Market
• Using Regression to model forecasted Financial Statements
• Understanding the drivers for forecasting

Understanding of Key Components

• Depreciation Schedule
• Debt Schedule
• Shares Outstanding Schedule

5-Year Financial Statement Projection Model

• Forecasting of Geographical and Segment based Revenues and Expenses.
• Forecasting a Company’s Income Statement
• Forecasting Assets and Liabilities on the Balance Sheet
• Projection of Shareholders Equity
• Role of different Financial Ratios during Projection
• Building an Integrated Cash Flow Statement

Supporting Schedules

• Integrating Dividend Payments Schedule into the Model
• Incorporating the Debt Schedule into the Model
• Incorporating a Detailed Depreciation Schedule

Integration and Balancing of Financial Model

• Balancing using debt schedule and debt sweep logic
• Integrating Balance Sheet, Income Statement and the Cash Flow Statement.
• Using cash flow either to bring down debt or build cash.
• Integration of Financial Statements using the interest schedule?
• Circular References in EXCEL and the mode to handle them.

Detailed Business Segment Build-Up

• Understanding the growth Drivers and projecting the key drivers of growth.
• In-depth growth analysis on the Historical Data.
• Project future detailed growth assumptions that roll up into larger projection model
• Digging into deeper layers of growth drivers

Operating & Division Segment Build-Up

• Calculate and analyze different operating segments
• Adjust for extraordinary items by segment based on MD&A and disclosed footnotes
• Project future revenue and segment income and allocate for corporate overhead
• Estimate projected COGS and SG&A on the entire base
• Further enhance model via sensitivity & scenario modeling and analysis

Sensitivity Analysis and Multiple Cases

• Sensitivity analysis to incorporate various assumptions and cases
• Build multiple scenarios and cases, including Base Case, Optimistic & Pessimistic Cases
• Sensitize profitability and cash flow of model based on various case assumptions

Enhancements to Core Integrated Financial Model

• Build a stand-alone depreciation schedule to better estimate working capital changes and free cash flow by depreciating existing PPE as well as new capital expenditures
• Allocate accumulated depreciation correctly
• Depreciate existing Net PPE and new CapEx based on weighted average life
• Create quick financial summary exhibit that summarizes key figures from financial model
• Residual value and EVA analysis

Different Concepts of Valuation

• Discounted Cash Flow based Valuation
• Relative Valuation
• Residual Based Valuation
• Calculation of Cost of Equity & Cost of Capital
• Sustainable growth rate
• Terminal value and its importance.

Discounted Cash Flow Techniques

• Understanding Dividend Patterns
• Dividend Discounting Model
• Calculation & Interpretation of Terminal Value
• Computation of Free Cash Flow to Equity & Free Cash Flow to Firm
• Valuation using FCFF & FCFE approached
• Normalization of Earnings
• Enterprise Value calculation

Relative Valuation Technique

• Understanding key valuation ratios like P/E, P/BV, P/S, P/CF and importance of each
• Computation of each of those ratios dynamically (Leading & Trailing)
• Using the ratios to forecast the value of the Equity/Firm
• Understanding PEG & Dividend Yield

Residual Valuation Techniques

• Understanding the concept of Residuals
• Benefits of Residual Valuation Models
• Calculating residuals like EVA & MVA
• Valuation based on Residuals

Sensitivity Analysis

• Using Advanced EXCEL Tools like Data Table & Goal Seek
• Using Monte-Carlo simulation to forecast sales and do a sensitivity Analysis