Investalks 301 @KL – Financial Modelling and DCF Valuation for Non-Financial Companies

Date: 10-11 Dec 2016

Time: 9:00am to 5:30pm.

Venue: Investalks Academy, 12-1, Jalan Perubatan 3, Pandan Indah, 55100 KL.

Course Fee:

  1. Investalks Student: RM680.00
  2. Public: RM750.00

Registration:

  1. Bank in:
    1. Bank: Maybank
    2. Account No.: 514383562062
    3. Account Name: Ivestalks Enterprise
  2. Send the payment receipt to investalksacademy@gmail.com
  3. Register here: https://docs.google.com/forms/d/1Hn9uLNAl8dKldiy_LkG1Ac7mPBTz3SmraXmyqFLe-OA/edit

Overview

This course aims to provide participants with a thorough understanding of how to build a robust financial modelling and valuation model from start to finish. Calculations cover revenues, operating and maintenance costs, capital expenditure, depreciation, debt and equity financing and taxation, leading to the build-up of integrated financial statements for the entity in question. The model is dynamic in nature, with the ability to run different scenarios and adjust the timing of key events.

During the course, participants also gain an insight into how to interpret the results and run sensitivities, as well as perform some degree of testing to reduce the incidence of modelling errors.

With the valuation model, participants will learn how to do estimate fair value by using Discounted Cash Flow model. Last but not least, participants will learn how to determine margin of safety by using systematic method.

Duration: Two days

Pre-course work: None required

Class size: The recommended class size is a maximum of 12 participants. This is so that each participant can obtain sufficient one-on-one attention and support from the course instructor.

Laptop: Participants should bring a laptop computer, so they can take part in the hands-on exercises. The laptop can be Windows or OSX based. The following software must be installed prior to the training:

  1. Microsoft Excel 2010/2013/2016
  2. Microsoft Word 2010/2013/2016
  3. Adobe Reader 6.0 or above

Format
The course is highly interactive, comprising of a mix of theory, group discussions, instructor-led demonstrations and Excel-based exercises for participants to undertake.
Participants are provided with a comprehensive slide pack, an illustrations booklet covering key Excel formulae, instructions to modelling exercises and exercise solution files. These will be used during the course and will serve as valuable reference material following the course should participants wish to refresh their skills at a later date.

Key objectives

The course is designed to cover the following key objectives:

  • Appreciate the difference between what makes a good model and a bad one
  • Follow a logical, structured and disciplined approach towards model building
  • Build a model (or significant parts of one) from start to finish
  • Learn how to translate key financial and commercial aspects into Excel
  • Understand better how to tailor the outputs of the model towards end users and interpret the results
  • Improve knowledge of Excel functionality
  • Learn ways to reduce the incidence of modelling errors
  • Learn Discounted Cash Flow model to estimate fair values.
  • Learn systematic method to determine margin of safety.

Target Audience

The course is ideal for those looking to achieve the following:

  • Gain an understanding of leading approaches towards company valuation, in order to build models that are robust and user friendly in nature
  • Be able to use existing models more competently, interpret the results and have greater comfort over the integrity and accuracy of the model’s calculations
  • Be able to use Discounted Cash Flow to estimate fair values.

The course has been tailored specifically for retail investors. Financial modelling and DCF valuation could be very complex, but can be extremely simple in some circumstances. The course strives the balance by providing sufficient practical knowledge and tips to retail investors, in order to build sensible financial modelling and DCF valuation in short time frame.

Prerequisites
Some prior knowledge and experience is assumed. For example, participants should have:

  • The ability to navigate easily around Excel’s menu options
  • Working knowledge of financial statements and rudimentary accounting
  • A basic understanding of leading approaches towards company valuation
  • A basic understanding of valuation ratios, such as P/E, Earning Yield, Dividend Yield, etc.
  • (Nice to have) A basic understanding of valuation models, such as Graham’s Formula, EBIT Multiples, Katsenelson P/E Model, etc.

Modules

Module 1: Financial Modelling

  1. You will learn exactly what financial modelling is and why we care about it.
  2. The overall model development process and items to cover during the design phase.
  3. Revenue and Expense Projections
    • Learn how to project a company’s revenue based on its average customer value by segment, pricing growth, and customer…
    • Understand the 3 different methods of projecting revenue, in general, and how to ensure that your numbers are not wildly off the mark in future periods.
    • Learn to project a company’s Income Statement expenses.
  4. Balance Sheet and Cash Flow Statement Drivers
    • Learn how to project Current Assets, Current Liabilities, and key Cash Flow Statement line items based on the company’s historical trends and future cash flow profile.
    • Learn which items are projected independently on the Balance Sheet, and which items flow in from changes on the Cash Flow Statement.
  5. Debt Schedule
    • Learn how to add a simple debt schedule – including how to factor in additional draws and repayments, interest, and the impact on the company’s cash balance.
  6. Share Issuance and Buy Back
    • Learn how to project share issuance and buy back, and the impact on the company’s Balance Sheet and Cash Flow Statement.
  7. Linking the Statements
    • Learn how to link the financial statement projections properly, tie together all the items, and ensure that the Balance Sheet balances
  8. Assumptions, sensitivities and scenario cases.
  9. Optimizations on Financial Modelling.

Module 2: Valuation

  1. The Time-Value of Money
    • To understand concept of time-value of money by using real life example.
  2. What Money is Worth?
    • Learn about different ways to measure the value of money and make investment decisions in this lesson, including the Present Value (PV), Net Present Value (NPV), the Internal Rate of Return (IRR), and the Weighted Average Cost of Capital (WACC)
  3. Free Cash Flow
    • Learn how to calculate Unlevered Free Cash Flow and Levered Free Cash Flow, and understand their differences and impacts in DCF.
  4. Discount Period
    • Learn how to optimize discount period rather than using the “normal” discount period, such as 1, 2, 3, etc.
  5. Discount Rate
    • Understand the concept of WACC and how to calculate it by the standard formula.
    • Learn alternate way to calculate WACC.
  6. Equity Value & Enterprise Value
    • Learn how Equity Value and Enterprise Value differ, the basics of how to calculate them.
  7. Terminal Value
    • Learn the two main methods for approximating Terminal Value and how to cross-check the output from both methods.
    • Learn more about what makes it tricky to select appropriate multiples and/or long-term growth rates in this calculation.
  8. Putting DCF into Action
    • Learn what the key concept behind a DCF, as well as the intuition for how you value a company based on its Free Cash Flows, your selected discount rate, and the company’s Terminal Value
    • Learn the major steps in doing DCF valuation.
    • Estimate Fair Value by DCF model.
  9. Uncertainty Risks of Fair Values
    • Learn systematic way to determine margin of safety before investing.
  10. Optimizations on DCF Model

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