Business analysis and valuation using financial statements
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COURSE DATES AND LOCATIONS
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INTRODUCTION
This course aims to help participants use financial data to evaluate a business’s performance, prospects and value. This course focuses on the analysis of business organizations, but many of the tools and techniques used are relevant to the financial analysis of private organizations as well.
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COURSE OBJECTIVES
By the end of the course, you‘ll be able to:
- Gain in-depth knowledge of financial analysis and business valuation techniques.
- Using financial data analysis as an integral part of the organization’s strategic analysis.
- Interpretation of financial statements.
- Cash flow analysis.
- Making judgments about the quality of earnings.
- Reveal hidden assets and liabilities.
- Apply financial data analysis.
- Evaluation through the application of modern accounting techniques.
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COURSE AUDIENCE
This course is made for
- Business Project Manager,
- Bank Branch Manager,
- Structured Finance Senior Relationship Manager,
- Finance Transformation Manager,
- Risk Manager,
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Marketing Managers,
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Financial Managers,
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General Accountant,
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Senior Accountant,
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Accounting related roles,
- Finance related roles,
- Investment Analyst,
- Affiliate marketing leaders,
- Career Enhancers,
- Digital Innovators,
- Business owner,
- Business Entrepreneur
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COURSE OUTLINE
Day One
Introduction to Business Valuation:
- 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
- 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
Day Two
Income Statement Analysis
- Cleaning up the reported results
- Adjusting for exceptional and non-core items – restructuring, provisions, impairments, discontinued items, MTM of financial assets and liabilities, disposal gains/losses, employee benefits (IAS 19), business combinations (IFRS 3), leases (IAS 17), customer loyalty programmers (IFRIC 13)
- How failing to calculate the correct underlying earnings figure will materially distort your valuation
- Revenues and earnings – sources, sustainability, growth outlook, main risk factors
- The nature of the cost base including sources of volatility (commodity prices, currency, regulation, interest rates, tax rates, and other risk factors)
- The impact of hedging (currency, interest rate, commodity)
- The impact of joint ventures, associates, and NCI
- Calculating key financial ratios from the income statement; calculating performance ratios
Day Three
Cash Flow Analysis
- Analysing the cash flow profile of the firm
- What are the main risks to the cash flow?
- What are the main sources and uses of cash?
- Are new investments adding value?
- Are earnings converted into operating cash flow?
- The impact of networking capital changes and capital spending
- What is the potential for paying dividends and for share buybacks?
- Calculating key financial ratios from the cash flow statement
Day Four
Balance Sheet Analysis
- The nature of the asset base
- Understanding a firm’s capital intensity and operating leverage
- Consolidation policies
- What to include in gross and debt?
- Valuation adjustments for derivative assets and liabilities, operating leases, contingent liabilities, and other off-balance sheet liabilities
- Outlook for impairments or revaluations
- Impact of credit metrics (leverage, interest cover, interest rates, liquidity, covenant breaches) on valuation
- Calculating key balance sheet ratios to assess a firm’s financial position relative to its sector
Day Five
Overviewing of a Forecasting Model for Valuation
- Creation of key value drivers, including macro-economic and company specific
- Building up the income statement and balance sheet
- Deriving the cash flow statement
- Deriving cash available for distributions
- Dealing with circularity
- Scenario analysis
- Return analysis
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