XFIN-656 - Financial Modeling in Excel
The objective of this course is to introduce students to the current practices in financial modeling and data analysis. Students will learn how to manipulate financial data and how to perform analysis using various analytical tools. This hands-on course provides the skills to apply the theories, concepts, and tools to develop spreadsheet knowledge that is used for effective financial analysis and decision-making. Students will learn how to build their own interactive financial model “from scratch” to practice blending finance, accounting, and Excel skills. In addition, this course focuses on developing spreadsheet skills for financial statement analysis and forecasting, stock and bond valuation, target capital structure estimation and capital budgeting. Particular emphasis is placed on the discounted cash-flow analysis as well as simple and multiple regressions.
Upon completion of this course, the successful student should able to:
- Evaluate balance sheet, income statement, and statement of cash flows relationships.
- Build a quick discounted cash flow (DCF) analysis.
- Build simple models for financial statement analysis and forecasting.
- Create working capital, depreciation and capital expenditure schedules.
- Perform sensitivity analysis to match expected financial performance.
- Utilize strategies for creating a reliable financial model.
Financial Analysis & Forecasting
Learn the fundamentals of accounting & financial analysis, book now!
Financial analysis and forecasting is a course designed to provide those wishing to acquire a detailed introduction to the subjects of accounting and financial analysis with the essential knowledge required.
The course is in the style of a series of presentations interspersed with case study material. Delegates are required to carry out a significant amount of financial manipulation and will involve the use of spreadsheet software in a number of cases.
The case studies are designed to enable the delegate to take ownership of the knowledge offered by applying it to a case immediately after the relevant presentation. This is further reinforced by the completion of group cases towards the end of the course.
The course is ideal for managers, analysts, consultants, entrepreneurs and others who seek a proper grounding in the fundamentals of financial analysis and forecasting.
The main subjects covered are:
- The Profit & Loss Account and the Balance Sheet
- Ratio analysis for financial analysis purposes
- Cash Flow Analysis
- Overview of current International Accounting Standards and global accounting
- Recognising Accounting Abuses
- Cash flow discounting and it s application to real world situations
- Analysing management information
- Project Analysis, Net Present Values and IRR's
- Use of spreadsheets and spreadsheet risk
- Forecasting using spreadsheet software.
- Presenting financial information
Dealing with the fundamentals
Introduction to financial analysis
- Differences in UK/US accounting terminology
- Identifying the relationship between cash flow and profit
- Development of an integrated cash flow model
- Recognising it’s all about cash
- Understanding the relationships between the three main accounting statements
- Exercise 1 - Accounting terminology
Fundamentals of accounting statements-the profit and loss account
- How the P&L has changed over the last 25 years
- Detailed review of the Profit and Loss account including explanation of all significant accounting terminology
- Profit types - trading, asset and business
- Inventory, depreciation, capitalised interest
- Minority interests and consolidation
- Exceptional and material items
Fundamentals of accounting statements-the balance sheet
- Detailed review of the balance sheet including explanation of all significant accounting terminology
- Understanding the fixed assets note
- Accounting goodwill – what is it?
- Liabilities, pension fund accounting
- Debt and other liabilities like debt
- Deferred tax, contingent liabilities
Financial analysis techniques-ratio analysis
- Objectives of ratio analysis
- Developing ratio analysis skills
- Different types of ratios
- How much information is there in ratios?
- Ratio rules – avoiding errors of principle
Case study: Use of ratios Delegates match ratios to different types of businesses Delegates consider what ratios do and don’t tell us
Cash flow analysis and accounting issues
Understanding cash flows
- Detailed review of the cash flow statement
- Analysing and interpreting cash flows
- Summarising cash flows for analysis
Case study: Summarising cash flows Delegates summarise cash flows for analysis purposes
Cash flow analysis
- The four phases in the life of a business
Case study: Examining patterns of cash flows Delegates match cash flows to sectors
Cash flow analysis-taking it further
- Dealing with the consequences of growth and no-growth
- Case study: Growth and no-growth cash flows
- Delegates restate cash flows to improve their understanding of performance
Accounting abuses and update
- Abuses of Fair Accounting
- Basic abuses relevant to all businesses
- More complex abuses relevant to larger groups
Case study: major Travel group
- Delegates examine and evaluate the P&L of this major UK based travel group
Global accounting in the new century
- Overview of the International Accounting Standards Board
- The implications of the IAS Initiative
- Review of new standards produced in the last five years
Financial mathematics and project analysis
The time value of money
- Present and future values
- Defining the discount factor
- Exercises: Discounting calculations
Net present value -developing the concept
- NPV’s and varying future cash flows
- Perpetuities and annuities
- Exercises: Annuities and perpetuities
- Introduction to project analysis
- Developing a forecast of the project cash flows
- Identifying the key risk areas
Evaluating capital investment projects
- Discounted cash flow techniques
- Calculating the internal rate of return
Case study: Speculative housing project Delegates perform investment appraisals to decide whether to proceed with a capital investment
Case study: Eight Projects Six delegates evaluate a number of projects and decide which projects should be pursued and which rejected
The responsibilities of management
- The essential aspects of the management task
Case study: Management information Delegates review and manipulate management information using Excel
Costing and break-even analysis
- Fixed and variable costs
- Marginal, absorption and standard costing
Case study: Variance analysis Delegates review a variance report and consider the possible causes for variances
*Spreadsheet analysis skills *
Introduction to spreadsheets
- Using spreadsheet programmes for business analysis and forecasting
- The issue of spreadsheet risk
Introduction to computer forecasting
- Overview of the forecasting process
- Creating useful models
- Sales, growth and margins
- Cost identification
- Driving the cash flow
Case study: New low cost airline Delegates prepare a spreadsheet summarising the forecasted first twelve months performance of this low cost airline and analyse it
Case study: New low cost airline Delegates identify the break-even of the project and develop a cash flow forecast for the same business
Case study: Financial analysis Delegates analyse a business and prepare forecasts of future performance
- The relationship between business risk and financial risk
- The four phases of the corporate life-cycle
- Identifying appropriate funding structures
- Recognising the drivers of funding strategies
Case studies and presentation skills
Case study: Business analysis Delegates analyse a business using the methods presented earlier in the course
Case study: Business forecasting Delegates value a business using the methods presented earlier in the course
Case study: Financial presentation In small groups delegates prepare and present a slide based presentation of the salient features gained from the analysis case in session one using spreadsheets and graphical techniques