Financial Analysis and Valuation for Strategic Decision Making
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Creating value is the central task for any executive. To generate value, managers need to be able to assess the financial impact of their decisions, which in turn requires an understanding of financial analysis techniques and valuation methods. Financial Analysis and Valuation for Strategic Decision Making will help you evaluate the financial consequences of business decisions and how to value companies, businesses, and projects.
Please note that this program requires a basic understanding of the following:
- Financial statements, including the balance sheet, income statement, and cash flow statement
- How accrual accounting differ from cash accounting, including revenue recognition (realization principle), expense recognition (matching principle), and asset and liability measurement (historical cost, selective fair value)
- Time value of money and present value calculations
These concepts, above, are covered in Columbia Business School Executive Education program Finance and Accounting for the Non-financial Executive. Participants will receive pre-course material that covers these concepts.
By completing Financial Analysis and Valuation for Strategic Decision Making, you will gain an understanding of financial statement analysis, corporate finance, and valuation methods. You will learn how to use tools to evaluate the financial consequences of various operating, investing, and financing decisions. Specifically, you will be able to:
- See how business decisions and activities are reflected in financial statements
- Reformulate the financial statements to facilitate an informative analysis
- Analyze the reformulated financial statements
- Develop cash flow forecasts and pro forma financial statements
- Estimate the cost of capital
- Value companies, businesses, and investment projects
- Assess the value of mergers, acquisitions, and strategic alliances
- Understand how various strategic, operating and financing decisions and activities affect value
- Conduct scenario and sensitivity analyses
- Evaluate and manage business risks
This three-day program is comprised of class lectures in which concepts will be developed and explained, with an emphasis on implementation. Participants will receive an excel workbook containing a valuation model and various financial analysis tools and use it to solve real-world exercises. The class notes, excel workbook and, most importantly, knowledge acquired in the program will provide participants with the tool kit needed for conducting financial analysis and valuation.
During Financial Analysis and Valuation for Strategic Decision Making, participants will explore the following topics:
- Primary financial statements
- Secondary financial statements
- The relationships among the different financial statements
- Other disclosures like notes, MD&A, risk factors, and market risk
- Underlying accounting concepts
- Limitations and distortions of the financial statements, and implications for financial analysis and valuation
- Summary of line-specific GAAP and differences relative to IFRS
- Reformulated financial statements
- Earnings quality
- Growth prospects
- Risks and exposures
- Price multiples and other methods of relative valuation
- Linking price multiples to fundamentals
- Implementing relative valuation
- Basics of fundamental valuation
- The discounted cash flow (DCF) model for equity valuation
- Template for DCF valuation
- Forecasting Free Cash Flow (FCF)
- Steady-state ratios
- Weighted average cost of capital (WACC)
- Terminal value
- From DCF value to value per share
- Implementing DCF
- Sensitivity and scenario analyses
- Capital structure and payout policy
- Alternative valuation models
- Valuation settings
Who should attend
Financial Analysis and Valuation for Strategic Decision Making is designed for upper- and senior-level executives and other professionals interested in deepening their knowledge of financial analysis and valuation. This is not an “entry level” program, so participants should have a basic understanding of financial analysis, including financial statements, balance sheets, income statements, cash flow statements, and accounting.
This program is ideal for executives in non-finance roles or in such departments as strategic planning, marketing, operations, product development, consulting, and sales who need a higher level of proficiency in understanding, evaluating, and making decisions based on the financial standing of their business unit, business, or organization.
It is also ideal for financial executives, financial analysts and portfolio managers.