Definition,Importance of financial modelling.

Uses of financial modelling

Types of financial modelling

Excel navigation – short cut keys for efficiency, data validation, conditional formatting, if statements, pivot table, vlookup, hlookup, xlookup, index – match, npv, irr, as such.

Income statement – revenue, cost of goods sold [cogs], gross profit, operating expenses

Balance sheet – accounting equation, assets, liabilities & shareholders’ equity. Further, study on deferred revenue, advance billing, accruals & prepaid, minority interest, working capital management deferred tax [books v tax] as such.

Effect of changes in one statement affecting other statements including statement of changes in equity

Financial ratio analysis – Profitability Ratio, Liquidity Ratio , Leverage Ratio, Efficiency Ratio

Capital Budgeting Analysis – Net Cash Flow, Cumulative Cash Flow, NPV, IRR and Payback Period.

Sensitivity & Scenario Analysis – Using MS Excel functions What If Analysis, Goal Seek, Data Table.

Cash Flow Statement – Operating, Investing & Financing Cash Flows, Direct Method v Indirect Method, Importance of Cash flow in financial modelling

Built based on financial forecasting & assumptions.

Identify key revenue and cost drivers.

Cost Analysis

Cash Flow Statement

Depreciation method & schedule

Built based on financial forecasting & assumptions.

Identify & select comparable companies based on size, growth, geographical location, industry or type of sector, production, market capitalization. Valuation Multiples – Market Value Data, Financial Statement Information, EV/Revenue

EV/EBITDA, P/E Ratio, Implied Enterprise Value, Implied Market Value of company, Implied value per share.

Interpretation & Analyze company with peer comparisons to determine relative valuation.

Time value for money – present value, future value

Free Cash flow to firm (FCFF)

Weighted Average Cost of Capital – Cost of Debt, Cost of Equity using CAPM

Terminal Value – Perpetuity Growth & Exit Multiple (EV/EBITDA)

Discount rate & Present Value

Enterprise Value to Equity Value

Private Equity firms evaluating acquisition targets.

Debt Schedule, interest repayments, IRR, equity waterfall.

Analysis of potential returns for investors after the debt repayments

Understand leverages, equity contributions and buyout structures.

Exit Strategies evaluation.

Build integrated models for combined entities

Focus on synergies, deal structuring.

Accretion / Dilution analysis.

Purchase price allocations, goodwill, combined P&L projections.

Investment bankers, corporate strategy teams use this model

Used for long-term infrastructure or development projects with structured financing

Public-private partnerships [PPP], energy projects or construction projects

Project feasibility and financial viability

Cash flow waterfall & project finance structure

Loan schedules, Debt-service coverage ratio (DSCR).

Valuation of company before going public.

Share dilution, Market capitalization, P/E multiples.

Help underwriters set a price range for shares and project future performances

Credit Risk

Liquidity Risk

Value at Risk (VaR)

Top-down vs Bottom-up Approach.

Regression Analysis and Trend forecasting.

Seasonality & Economic Factors.

Key Variables and stress testing models

Monte Carlo Simulation Techniques.

Break even Analysis

Introduction to Power BI for Finance.

Data Importing & Cleaning.

Creating Dashboards & Reports