Valuation is the Process to determine the current worth of any asset. In our course, the asset is a company. For the valuation of companies, following are the three widely used techniques.
- Discounted Cash Flow Valuation (DCF)
- Relative Valuation (Trading Combs, Comparable Analysis)
- Transaction Valuations
In general all main stream finance profiles require the valuation skills found in our course. We shall take the most important three techniques which are used in every research house, Rating agency, Investment bank, consulting firm, Private equity and KPO. We shall understand the application of the techniques with real case studies and companies.
Discounted Cash Flow model (DCF) Modeling
In Financial modeling, cash flows are only forecasted where as in DCF valuation; those cash flows are used to derive the intrinsic value of the company. So by now the participants would have learned how the Financial Model is designed and Projections are made for the Company. Now we learn how to use Financial Models in Valuations.
Valuation is the most important part the investment banking and corporate finance skill set. You need to have theoretical knowledge of valuation before building valuation models.
Key Learning Outcomes
When the theoretical frame work is laid down, the participants start learning DCF model which includes the calculations of FCFF, WACC, Terminal Value, Levered and un-levered Beta and Intrinsic Value.
- Using cash flows forecasted in the course, participants learn to prepare a DCF valuation model in Excel from scratch
- Understand differences between Enterprise value & Equity value, relative value & intrinsic value, Un-levered and levered free cash flows, and the implication on Enterprise value and implied share price.
Deal with Non-equity claims, WC, CapEx and debt related items
Calculate Terminal value with Multiple and Perpetual method
Use of CAPM to calculate the discount rate by deriving the cost of debt of equity.
Understand the role of capital structure in determining beta, the cost of equity, and ultimately WACC
Understand use of beta and how to de-lever and re-lever beta and implication on WACC.
Calculate shares outstanding using the treasury stock method
When Dilutive securities are ITM (In-the-Money) Utilize the enterprise value to determine implied share prices.
Calculating net debt and treatment of debt equivalents such as preferred stock, convertible securities, capital leases, and minority interest
Calculating options and convertible securities using both the standard and treasury stock methods.