Course Outline

Module 1 – Objectives of Financial Modelling

• Profitability planning
• Liquidity planning
• Credit planning
• Valuation of companies
• Valuation of financial instruments

Module 2 – Steps to Building a Financial Model

• Start with historical facts
• Isolate parameters
• Identify cost behaviours
• Determine inter-relationship between parameters
• Provide a range for all parameters
• Scenario analysis

Module 3 – Financial Statements and Their Analysis

• Balance sheets
• Income sheets
• Cash flow statements
• Statements of shareholders’ equity

Module 4 – Top Financial Models

• Three statement model
• The discounted cash flow model
• Merger model
• Initial public offering model
• Leveraged buyout model
• Sum of the parts model
• Consolidation model
• Budget model
• Forecasting model
• Option pricing model

Module 5 – Stages in Valuation Procedures

• Preparatory stage
  • Data collection
  • Management interviews
• Analysis stage
  • Economy and industry analysis
  • Understanding transaction background
• Calculations stage
  • Valuation approaches
• Final stages
  • Report preparation
  • Client presentation

Module 6 – Approaches Used in Bank Valuation

• Asset-based approaches
• Market approaches
• Income approaches
• Contingent claim valuation

Module 7 – Drivers of Bank Valuation

• Economic growth
• Level of nominal interest rates
• Competition
• Financial innovation
• Stock market
• Sound judgement

Module 8 – Trends to be Considered During Bank Valuation

• Historical and expected growth
• Competitive environment
• Regulatory environment

Module 9 – Valuation Techniques in Investment Banking

• Discounted cash flow analysis
• Precedent transactions analysis
• Comparable companies analysis

Module 10 – Methods to Calculate Expected Return On Equity/Discount Rate

• Gordon growth model
• Average profitability
• Cost of foreign funds
• The capital asset pricing model
• Arbitrage pricing theory model