Financial Modeling and Forecasting Techniques Using Excel

Financial modelling is crucial for taking investment decisions that can have a huge financial impact on companies. By attending this course, you will be able to effectively prepare and build financial models to cater to different types of investments alternatives, understand and analyse time value of money, present value, future value and weighted average cost of capital (WACC) in addition to proper analysis of financial information.

Course Methodology

This course uses hands-on application of financial modelling in Excel, in addition to demonstrating theoretical core topics. The course also features real-life case studies and presentations by participants. 

Course Objectives

By the end of the course, participants will be able to:

• Apply time value of money concepts
• Perform and interpret financial analysis
• Apply cost of capital calculation techniques
• Construct forecasted financial statement models and perform sensitivity analysis
• Use the free cash flow technique in determining the value of a project or a company
• Develop financial models using Excel different modelling techniques

Target Audience

Professionals in corporate finance, financial analysts, investment bankers, financial controllers, finance managers, professionals responsible for project valuation, project finance, portfolio managers, and professionals in the private investment industry.

Target Competencies

• Learn financial applications of Excel
• Perform capital budgeting analysis
• Understand and practice Present Value (PV), Net Present Value (NPV), Internal Rate of Return (IRR)
• Understand and calculate Weighted Average Cost of Capital (WACC)
• Perform financial modelling using Excel
• Review scenario analysis

Note

This is a hands-on training course using laptops, participants need to bring their own laptops equipped with a fully functioning version of MS Excel 2010/2013.

Course Outline

Financial calculations: Applications

• Time value of money:
  • Present Value and Net Present Value
  • Internal Rate of Return and Multiple IRR (MIRR)
  • Using XNPV and XIRR
• Amortization of loan schedule
• Effective yields and returns

Corporate financial analysis

• Profit and loss versus balance sheet analysis
  • Comparable company analysis
  • Building block analysis
  • Vertical, trend, and horizontal analysis
  • Liquidity
    • Current, quick, and cash ratios
  • Asset management and activity

• AR and AP Turnover
• Cash conversion cycle
• Asset turnover
• Solvency, leverage and gearing
  • Debt, equity, and times interest earned ratios
• Assessing profitability management
  • Profit margin, gross margin, return on assets, return on equity
• Market and valuation
  • Price-earnings and earnings per share ratios
• Modelling the DuPont identity
  • The three-step models

Calculating cost of capital and capital structure

• The Gordon dividend model
• Supernormal growth
• Calculating cost of equity and cost of debt
• Computing the expected return on the market
• Computing Weighted Average Cost of Capital

Financial statement modelling

• How financial models work
• Modeling income statement
• Modeling balance sheet
• Free Cash Flow measurement (FCF)
• Using FCF to value the firm and its equity
• Sensitivity analysis
• Discounted cash flow analysis

Developing an integrated financial model

Model construction techniques

• Data tables design
• Assumptions and input variable rules
• Array functions and formulas
• Spinner data modeling
• List box data modeling