Course Overview

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About the Programme

Financial modelling is the umbrella term used for a set of practical skills, techniques, methodologies and disciplines used to create a graphic analytical tool. This tool is used to aid understanding and decision making in areas such as financial planning, investment analysis, valuation and strategy.

The modern business environment now expects everyone to have at least basic Excel skills. To stand out as a finance professional, you need to have more than just the ability to use a spreadsheet in your arsenal. The skills required to develop quality financial models are highly sought after in the marketplace and provide a tangible advantage to a business career.

At Capworth Training you will learn essential, best practice financial modelling techniques, and how to apply them in different situations, giving you the confidence and ability to develop sophisticated financial models.

This course allows users to improve the reliability, quality and timeliness of their Excel models. Financial modelling demands a logical consistent approach and this workshop builds a financial analysis and a valuation model through a series of practical stages. Upon completion, delegates will have a comprehensive understanding of advanced modelling, as well as how each technique can practically be applied through the use of Excel.

This seven-day programme will be delivered through a practical and interactive case study and worked examples, demonstrating how and why each technique is used. Emphasis is placed on the delegates gaining practical, hands-on experience of the design and construction of financial models in Excel. Delegates will also benefit from formal lectures and group discussions. Each delegate will be given a complimentary laptop; comprehensive product notes and modelling software will be provided for future reference.

Course Objectives

On completion of this highly practical, hands-on training course, attendees will be able to:

  • Build a financial model from a blank sheet

  • Design models which minimise errors

  • Write models which can be maintained and augmented in the future

  • Develop models with advanced techniques such as risk, sensitivity, optimisation and forecasting

Who Should Attend

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The course will be of value to professionals in the following areas:

  • Finance Directors/Financial Controllers/CFO’s
  • Business/Financial/Treasury/Market Analysts
  • Corporate/Structured/Project Finance Officers
  • Financial/Strategic Planners
  • M&A Specialists
  • Private Equity
  • Project/Commercial Management
  • Business Development and Marketing
  • Systems Analysts
  • Budget Managers
  • Profit Centre Managers
  • Credit Risk/Treasury Managers
  • Actuaries

Course Outline

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  • Alternative model layouts
  • Planning the flow of information through a model
  • Simplicity is the key to producing clear models
  • Initial steps required to set preferred defaults for Excel

Building a Model

  • Importance of separating input data, calculations and reports
  • Maintaining a logical order in the model encourages logical thought processes
  • Modelling Cash and Interest on Cash
  • How the cash calculation is central to any good financial model
  • How to model interest on cash without creating circular references

Income Statements and Balance sheets

  • Typical layout of the most common financial statements – What is shown where
  • Alternative ways of modelling tangible fixed asset to ensure they are not over-depreciated
  • Using ratios to calculate working capital items
  • How to include goodwill, shareholdings and dividends in a model

Introduction to Sensitivity Analysis

  • How easy it is to add sensitivity analysis to a well written, existing model
  • Alternative ways of including sensitivity analysis and how longer ways are normally clearer

Introduction to DCF Valuation

  • Basic theory behind discounted cash flows and valuations based on them
  • How best to lay out a DCF valuation calculation and the steps required to obtain a result

Graphics & Data Tables

  • How to produce data tables – one of Excel’s most useful features
  • Producing meaningful graphics based on the results of data tables

Module 2: Advanced Financial modelling

Model Structure and Planning

  • Model design and structure – key steps
  • Planning the equity valuation model
  • Required sheets, calculations and modules
  • Five essential auditing techniques
  • Case: completing and checking the financial analysis/valuation template

Financial Analysis and Valuation

  • Different approaches to valuation
  • Financial analysis and valuation framework model
  • Useful Excel methods, features and techniques
  • Common pitfalls and mistakes in Excel

Non cash flow methods

  • Accounting methods
  • Dividend discount models
  • Market-based methods – EPS and multiples

Forecasting and Equity Valuation

  • Forecasting Methods
  • Review of forecasting methods
  • Macro forecasting
  • Linear methods
  • Review of historical performance
  • Relationship between company and financial strategy
  • Identifying and forecasting key drivers
  • Linkages and modelling problems

Free Cash Flows

  • Derivation of free cash flow
  • Checking model results and redefining forecast
  • Reasonableness of forecast and results
  • Case: adding free cash flow to the model

Cost of Capital

  • Alternative theories – bonds and arbitrage pricing theory
  • Capital Asset Pricing Model constituents
  • Discussion and agreement on WACC inputs
  • Asset and equity betas and risk
  • Mathematical derivation

Initial Equity Valuation

  • Methods of adding terminal value
  • Producing an equity valuation
  • Comparison to existing share price

Alternative Cash Flow Valuation

  • Time varying WACC
  • Adjustments to value
  • Adjusted present value (APV) method
  • Existence and addition of financial and operational synergies
  • Reconciliation to economic profit

Risk and Sensitivity

  • Understanding of risk and multiple answers
  • Sensitivity and tables
  • Creating sensitivity graphs
  • Scenario planning based on economic climate
  • Alternative scenario methods

Optimum Structure and Targeting

  • Achieving a target valuation
  • Goal seeking method
  • Testing valuation with leverage and structure

Management Reporting and Model Review

  • Management reporting and summary
  • Suggestions for other improvements to the valuation model
  • Final audit
  • Securing and protection
  • Documentation and maintenance

Location, Pricing & Dates

All courses are available in-house (your preferred location) but throughout the year, we run selected courses as scheduled programmes. To view scheduled courses, please hover over dates on the calendar below.