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DCF Valuation Program


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DCF Valuation Program

DCF Valuation modeling program involves the fundamental theories and practices of valuation analysis, strategy analysis, prospective analysis, DCF modeling, trading comparable and transaction comparable. Modeling through Excel will build enough confidence in the participants so that they are able to create their own financial model right from scratch, and use it for solving their business problems. The program is designed to offer students the intensive instruction and training needed to successfully compete in rapidly developing global financial markets.

Learning Objectives

After completing this course, the participants will be able to:

  • Build a financial model from scratch as done at financial institutions
  • Work on Excel and use formatting best practices, efficient formula construction, and appropriate driver selections
  • Use Advanced Excel functions to present various sensitivities to projected financial metrics
  • Fix circularity problems, iteration, and other common modeling troubleshooting
  • Cross check the Balance Sheet/ Cash Flow Statement
  • Understand and describe valuation and how historical valuation is done
  • Understand and explain the techniques, elements and approaches of forecasting
  • Provide an overview of Discounted Cash Flow
  • Explain the Dividend Discount Model
  • Calculate the Free Cash Flow to Firm (FCFF) & Free Cash Flow to Equity (FCFE)
  • Calculate the Discount Rate (Cost of Debt, Cost of Equity & Cost of Capital)
  • Identify the Revenue Drivers and Cost Drivers
  • Prepare a Full DCF Model
  • Calculate Equity Value Multiples: P/E, P/CF, P/BV, P/S, PEG, Dividend Yield
  • Provide an overview of Trading Comparables
  • Calculate basic EV and perform various CACS Adjustments
  • Normalize the Earnings and identify the exceptions
  • Calculate Last Twelve Months (LTM) or Trailing Twelve Months (TTM)
  • Perform Trading Multiples analysis – EV/EBITDA, EV/EBIT, EV/Sales
  • Provide an overview of Transaction Comparables
  • Describe the different kind of Deal Considerations
  • Practice working on the Transaction Template
  • Perform the Private and Public Transaction Comp
  • Perform Technical Analysis
  • Provide an overview of Corporate Credit Analysis
  • Explain how the valuation of bonds are done
  • Provide an overview on risks involved in bond investment
  • Understand and explain the interest rate sensitivity of a bond
  • Describe the yield curves
  • Understand and perform securitization
  • Understand and interpret the Financial Statements
  • Evaluate the financial position from credit perspective

Course Sections

This program is divided into 15 sessions.

Session 1 – Overview of Excel and Financial Modeling

Session 2 – Advanced Analysis Techniques

  • Part-1 Financial Modeling

    • Working named Ranges
    • Working with Charts
    • Data Validation
    • Hyperlink
    • Conditional Formatting
    • Pivot Tables
    • Auto & Advance Filter
    • Grouping & Ungrouping
    • Sheet Protection
    • What if Analysis
    • Understanding the Financial Statements and its interlinking:
      • Income Statement
      • Balance Sheet
      • Cash Flow Statement
    • Ratio Analysis
      • Liquidity Ratio
      • Profitability Ratio
      • Solvency Ratio
      • Leverage Ratio
      • Activity/Turnover Ratio
    • Basic and Diluted EPS
    • ROE and DUPONT Analysis
    • Case study on Ratio Analysis
  • Session 4 & 5 – Introduction to Valuation

    • Need to value companies
    • Difference between price and value
    • Different terms of value

    - Market value
    - Intrinsic value

    • Valuation Techniques

    - Absolute Valuation

    • Free Cash flow to Firm (FCFF)
    • Free Cash flow to Equity (FCFE)
    • Cost of Equity (Ke)
    • Cost of Debt (Kd)
    • Cost of Capital (WACC)

    - Relative Valuation

    • Cost of Debt (Kd) Cost of Capital (WACC)
  • Session 6 – Making a complete fully integrated DCF Modeling Spreadsheet

    • Understanding and creating a financial model template
    • Calculating Growth Drivers and Future Assumptions
    • Revenue Build-Up - Projecting the Future Revenues
    • Cost Build-Up - Projecting the Future Cost
    • Modeling historical & projected financial statements - P&L and B/S
    • Building cash flow statement
    • Asset and Depreciation Schedule
    • Debt and Interest Schedule
    • Building an integrated model for valuation using DCF
    • Sensitivity/Scenario Analysis
    • Incorporating other accounting details like revenue recognition, deferred taxes etc.
  • Session 7 –Trading Comparable

    • Introduction to Trading Comps
    • EV Calculation
    • Discussing various CACS Adjustments
    • Income Statement Normalization
    • Concept of LTM or TTM
    • Trading Multiples analysis - EV/EBITDA, EV/EBIT, EV/SalesCase Study on Trading Comps
  • Session 8 –Transaction Comparables

    • Introduction to Transaction Comps
    • Understanding Deal Considerations
    • Introduction to Transaction Template
    • Private and Public Transaction Comp
    • Transaction Multiples Analysis - EV/EBITDA, EV/EBIT, EV/Sales
    • Case Study on Transaction Comps
  • Session 9 – Investment Banking (IB)

    • Introduction to IB
    • Pitch Books
    • Company Profiling
    • Case Study on Company Profiling
  • Session 10 & 11 – Project Finance Modeling

    • Types of funding
      • Equity funding sources – cost, pros and cons
      • Debt funding sources – cost, pros and cons
    • Characteristics of project finance
    • Risks & Mitigates
    • Contractual arrangements to mitigate risk
    • Developing a fully integrated project finance modeling spreadsheet
    • Interest during construction
    • Escrow arrangement
    • Cash flow waterfall
    • Feasibility Analysis
    • Scenario Building Project IRR, Equity IRR, NPV Profiling