Financial Analysis for Corporate Valuation

Euromoney Learning Solutions

How long?

  • 2 — 3 days
  • in person

Euromoney Learning Solutions

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About the course

The Financial Statement & Business Analysis course forms Module 1 of the Corporate Analysis & Valuation School.

This practical two-day course explores the three main types of financial analysis for valuation - income statement analysis, cashflow analysis, and balance sheet analysis – equipping you with the skills needed to analyse underlying performance and calculate key financial ratios.

You will also discuss the new IFRS accounting standards and examine various accounting tricks that are used to enhance profitability and operating cashflow.

By the end of the course, you will have a thorough understanding of the following:

  • Valuation fundamentals Equity and EV multiple valuations DCF valuations
  • Applying different valuation techniques and forecasting using Excel
  • The impact of capital structure on valuation
  • The impact of corporate finance transactions on valuation
  • How qualitative factors influence valuations
  • More advanced DCF techniques
  • The impact of capital structure on valuation
  • The impact of corporate finance transactions on valuation, including LBOs
  • Specific valuations eg. high growth, cyclical and distressed companies

Agenda

Day 1

Enterprise value versus equity value

  • Calculating equity value including NCI
  • Calculating gross debt and net debt
  • Adjusting for provisions, quasi-debt, equity linked instruments, equity kickers, options etc

Introduction to corporate valuations

  • Valuation fundamentals
  • Drivers of valuation – ROIC, WACC, growth, size
  • The FCF perpetuity valuation formula
  • The key value driver valuation formula
  • Economic profit and enterprise value added
  • ROIC vs. WACC – computation and drawbacks
  • Case studies: valuing companies using the above formulae

Multiple valuations

  • Equity multiple valuations based on net income, EPS, dividends and NAV
  • PE ratios, PB ratios and dividend yields
  • EV multiple valuations based on revenues, EBIT, EBITDA, EBITDAR
  • Adjustments to group EV to derive operating EV
  • Adjustments to EV multiples to derive the correct underlying multiple

Day 2

Multiple valuations continued

  • Choosing comparable firms
  • Reconciliation of multiple valuations to the key value driver formula
  • Examining how using different multiples gives different valuations
  • Earnings versus cashflow
  • EPS dilution/enhancement
  • Case studies: valuing companies using multiple analysis

DCF valuations

  • Calculating OPAT and unlevered free cashflow
  • The CAPM; unlevered and levered betas, risk premia, kd, ke, tax shields and WACC
  • Explicit forecast period and terminal value
  • Assessing the terminal value (multiple or perpetuity method)
  • Case studies: modelling in Excel to produce DCF valuations

Day 3

  • DCF valuations continued
  • Importance of final year forecasts – fading the forecasts
  • Comparing valuations using multiples vs. DCF
  • Advantages and drawbacks of each valuation method
  • Calculating NPV and IRRs

Impact of corporate finance transactions on valuations

  • Friendly/hostile takeover
  • Merger
  • Demerger/spinoff/break-up
  • IPO
  • New equity offerings – calculating the TERP

The impact of capital structure on valuation

  • Increasing equity value through the use of debt
  • Focus on shareholder value – dividend policy and share buybacks
  • Companies suited to leverage
  • Debt markets and credit ratings
  • Analysing debt capacity

The impact of qualitative factors on valuation

Sovereign, macro-economic

Credit ratings and outlooks, country risk premia, CDS spreads, interest rates, currencies, geo-political risks

Industry Specific

Growth outlook, volatility, technological risks, impact of internet, regulation, level of competition, scope for differentiation, barriers to entry, new competitive threats, capital intensity, changes in vertical integration, buyer power and supplier power, changing consumer habits, product life cycle, degree of consolidation vs fragmentation

Firm specific

  • Market position, competitive advantages, cost position, ability to innovate and re-act, new product introductions, product and geographical diversification, level of vertical integration, event risk management, M&A track-record
  • Corporate governance, management, operating, financing and corporate finance strategies

Experts

Sarah Martin

Former Executive Director of CSFB and Lehman Brothers, the Course Director has spent seventeen years working as an investment banker in Europe and the US. She has principally worked in the credit markets and has experience of the US and European high grade and high yield markets, the European new...

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Financial Analysis for Corporate Valuation at Euromoney Learning Solutions

From  2935 GBP$3,945

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