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Financial Modeling
Fairway Hotel 19th to 21st June 2013
WHY BUILD MODELS Understanding the meaning of the term financial modeling Giving a rationale for building and using financial models Understanding who uses the results of financial models Model design fundamentals Golden rules Planning the logic flow and the interface of the worksheets Input / assumption sheet Calculation sheets Output / report sheet How to make a model flexible and self balancing Sensitivity analysis Designing the analysis worksheet MODEL BEST PRACTICE ISSUES: * What makes a good financial model? * Common errors * Consistent timelines; consistent formulae; hard coding; organization and accessibility of model inputs; organization of summary outputs; workflow; organization of worksheets within a workbook; maintaining a log version control; naming conventions, formatting conventions Circular references: * Which are permissible and which are not * Work-arounds if the model needs to be audited Model structure Entering assumptions Creating the calculations to be used Dates get them right! The model quite often hinges on dates MODELING FINANCIAL STATEMENTS Income Statement Balance sheet o Fixed Assets - Depreciation o Debtors o Creditors o Debt Cash flow

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Developing debt schedules Creating a loan amortization schedule PMT, IPMT, Date etc functions Ratio Analysis using Excel How to calculate common ratios from the financial statements using excel Exercise: Financial Statement Modeling Build a fully linked and dynamic financial statement model INVESTIMENT ANALYSIS Identifying scenarios and using the model to perform breakeven, what-if and payback analysis Modeling Breakeven analysis What assumptions will deliver and show the results in a data table Exercise: Investment Analysis Pay Back, NPV, ROI, and IRR concepts Investment Appraisal VALUATION USING TERMINAL VALUE OF FCF A quick refresher of theory risk, FCF, ROC Net Present Value (NPV), Discounted Cash Flow (DCF)and Internal Rate of return (IRR)in Excel Cost of Capital, WACC, and Beta calculations in excel Modeling logic planning a valuation model Common errors the treatments of: > Inflation, capital expenditures and tax Discounted Cash Flow and Time Value of Money Model Exercise: Building a Discounted cash flow (DCF) valuation model MANAGEMENT REPORTS Creating a management summary Dynamic charts Management Ratios Basic Macro recording, Data Tables, Combo Box, Spinners, OFFSETS, and other Microsoft Excel advanced level features and functions will be used throughout the training