Investment Banking and Valuation Professional Certificate
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Day 1
- Introduction to financial accounting
- Balance sheet equations
- Types of ownership
- Function of an audit
- The income statement
- Revenue recognition and the matching concept
- Relationship between balance sheet and income sheet
- Statement of retained earnings
- Earnings per share
Module 1: Accounting Concepts
Module 2: Measuring Income
Day 2
- Adjustments to accounts
- Implicit transactions
- Classified balance sheet
- Income statement
- Case study - Goodyear, Inc. balance sheet and income statement
- Revenue recognition
- Revenue measurement
- Credit sales and accounts receivable
- Assessing level of accounts receivable
Module 1: Accrual Accounting and Financial Statement Formats
Module 2: Accounting for Sales
Day 3
- Overview of long lived assets
- Depreciation
- Depreciation methods
- Gains and losses on sales of fixed assets
- Intangible assets
- Depletion
- Concept of deferred taxes
- Computation of deferred tax items
- Other deferred tax items Liabilities and interest
- Current liabilities
- Long term liabilities
- Accounting for leases
- Shareholder rights
- Authorized, issues and outstanding shares
- Preferred stock
- Issuance of shares
- Exchanges and conversions
- Dividends
Module 1: Long lived assets and depreciation
Module 2: Deferred Taxes
Module 3: Equity
Day 4
- Background on stockholders equity
- Types of capital stock
- Cash dividends
- Preferred stock
- Employee stock options
- Other items
- Purpose of the statement of cash flows
- Types of cash flow
- Preparing the statement of cash flows
- none
Module 1: Equity
Module 2: Cash Flow
Module 3: Free Cash Flow
Day 5
- Overview of corporate investments
- Short term investments
- Long term investments in bonds
- Market, equity and consolidation methods
- Pension plan types
- Measures of defined benefit pension plan liabilities
- Cost components of a pension plan
- Plan assets
Module 1: Accounting for Investments
Module 2: Pension accounting, accounting for stock options
Day 1
- Interaction of the market, the client and credit
- Understanding market, credit and operational risks
- The 5Ps and 5Cs of Credit
- Shareholder Value Added
- Risk/Reward and capital allocation
- Purpose and Payback
- Corporates versus Financial Intermediaries
- Specialized Industries
- Specialized Products
- Sources of information
- Industry Analysis including SWOT, critical success factors and Porter framework
- Operation/Business analysis
- Business risk versus financial risk
- The asset conversion cycle
- Environmental and Regulatory risk analysis
- Management Analysis
- Early Warning Signs
- Credit red flags
- Exercise: Participants will complete the business and industry analysis for the selected company
Module 1: Overview of Credit
Module 2: Credit analysis fundamentals
Module 3: Business and Industry Analysis
Day 2
- Advantages and Limitations of ratios
- Types of Ratios including: profitability, asset quality and efficiency, leverage and coverage
- Peer comparisons/Industry benchmarks
- Specialized industry ratios
- Seasonality
- Overall performance ratios: DuPont formula
- Exercise: Balance Sheet Recognition exercise : Participants will complete the ratios for the selected company
Module 1: Ratios and Credit Statistics
Day 3
- Structure of the cash flow statement
- Sources and Uses
- Reconciliations including PP &E, Intangibles, Investments, Deferred Taxes, Long term debt, Minority interest and Equity
- Exercise: Participants will complete the cash flow for the selected company
- The Audit
- Review of historical patterns and industry performance
- Income Statement analysis
- Balance Sheet analysis
- Cash Flow analysis
- Exercise: Participants will work in small groups to complete the FYE analysis
Module 1: Cash flow analysis
Module 2: Historical Financial Analysis
Day 4
- Contingent liabilities
- Operating leases
- Debt of joint ventures and unconsolidated subsidiaries
- Guarantees
- Take-or-pay contracts and obligations under throughput and deficiency agreements
- Receivables that have been factored, transferred or securitized
- Contingent liabilities e.g. potential legal judgments or lawsuit settlements
- Financial guarantees
- Performance guarantees
- Ratings triggers
- Covenants
- Revenue recognition
- Unusual gains and losses
- Asset write-offs
- Swap exposures
- FX exposure
- Pension deficits
- Securitization
- Structural subordination
- Partnerships/SPVs
- Leases
- Environmental
- Product liability
- Exercise: Annual Reports: identifying and recognizing industry and company specific off-balance sheet risks
- Building a forecast-framework and methodology
- Qualitative and quantitative factors
- Base, management, and downside cases
- Critical value drivers
- Analyzing results- assessing Debt capacity, Recommending financing alternatives, Public versus private, quantifying results and drawing conclusions
- Exercise: Forecasting the critical value drivers for selected companies
Module 1: Off Balance Sheet Items
Module 2: Additional Risks to consider
Module 3: Forecasting
Day 5
- Investment grade versus non-investment grade
- Holding company analysis
- Guarantees, Keepwells, LOMIs
- Collateral Secured versus unsecured
- Liquidation analysis
- Borrowing Base
- Covenants
- Subordination
- Exercise: Due diligence for selected case studies
- Internal risk ratings
- Rating agencies
- External sources
- Exercise: Participants will present the complete credit analysis for the selected company. Financial calculator required
Module 1: Structuring and Documentation
Module 2: Comparing credit ratings
Day 1
- Present and future value
- Compounding (annual, periodic, continuous)
- Annuities and perpetuities
- Complex problems
- Payback and discounted payback
- Internal rate of return (IRR) and modified IRR
- Net present value (NPV)
- EVA
- Pros and cons of each
Module 1: Time Value of Money
Module 2: Project analysis
Day 2
- none
- none
- Real v nominal returns
- Asset values
- Comparables
- Perpetuities and growing perpetuities
- none
Module 1: Brief Review of Financial Statements
Module 2: Overview of DCF and intrinsic valuation
Module 3: Determining Cash Flows
Module 4: Terminal Value
Module 5: Enterprise Value vs Equity Value
Day 3
- none
- Straight
- Convertible
- Cost of Equity
- alpha
- beta
- equity risk premium
- none
- none
Module 1: Risk and return overview
Module 2: Cost of Debt
Module 3: Capital Asset Pricing Model
Module 4:Other Methods
Module 5: Weighted Average Cost of Capital
Day 4
- In theory - MM
- In practice - costs of financial distress, optimal capital structure
- none
- Pros and cons
- Peer Group Valuation
- Selecting the peer group
- Key ratios
- P/Es, EV/EBITDA, etc
- none
- none
Module 1: Capital Structure
Module 2: Adjusted Present Value
Module 3: Differences to WACC valuation process
Module 4: Introduction to Option Pricing for Corporate Finance
Module 5: Reviewing a Fairness Opinion for Valuation Methods
Day 5
- Bank lending - term loans and lines of credit, bilateral and syndicated loans
- Debt - Investment grade, High yield, Convertibles
- none
- none
- Venture Capital
- Public Equity
- IPOs
- Secondary (US)/ Rights Offerings (Europe)
- Rationale
- Payment, Leveraged and Management Buyouts
- none
Module 1: Financing the Corporation and transactions
Module 2: Preferreds
Module 3: Equity
Module 4: Private Equity
Module 5: Mergers & Acquisitions
Module 6: Wrap-up case study
Day 1
- Introduction / Tips & tricks that will help you speed up your spread sheeting
- Multiple sheet models
- Multiple file models
- Drilling down
- Logical tests: Building warnings into your models
- Protecting your data
- Database activities
- Dfunctions
- Grouping downloaded data by account headings
- Vertical and horizontal lookup tables
- The Choose function: Using Choose to calculate stocks & debtors on 3 different bases
- Interactive formulas to extract data
- Using masks or switches
- String functions
- Data tables
- Outlining
- Graphs
- Indirect addressing
- Consolidation
- Macros
- Each module will be followed by hands on exercises
Module 1: Advanced Excel for Financial Modeling
Day 2
- Introduction and Overview
- Basic Valuation Techniques
- Pro-Forma Modeling
- Exercises 1. Projecting simple financial statements, determining the value of equity
- Case Study Exercises Build Financial Model for Goodyear
Module 1: Modeling Valuation
Day 3
- Review and Discussion
- Mergers and Acquisitions
- Case Study Exercises Brown-Forman Distillers Acquisition of Southern Comfort
- Nestle's Acquisition of Ralston Purina
- Case Study Exercises
- Cost of Capital and CAPM
- Exercise 1 Return on equity
- Exercise 2 Seven steps using CAPM to determine the cost of capital
- Exercise 3 Implied risk premium in the current P/E multiple
- Exercise 4 Four steps using the Gordon Model to determine the cost of capital
- Exercise 5 Four steps using the P/E multiple to determine the cost of capital
- Financial Valuation of Goodyear
- Case Study Exercises
Module 1: Modeling M&A
Day 4
- Review and Discussion
- Accrual Accounting Valuation
- Exercise 1: Accrual accounting valuation of Wal-Mart Stores
- Exercise 2: Accrual accounting for GE
- Exercise 3: Accrual accounting for Hewlett Packard
- Exercise 4: Accrual accounting valuation of Peets Coffee
- Valuation Using Multiples
- Transaction Multiples
- Exercise 5: Valuation of Eli Lilly using multiples
- Discussion
- Special Valuation Issues
- Exercise 6: Implied Profit Margin
- Exercise 7: Three stage valuation model
- Goodyear: Applying the Market Approach and Accrual Accounting
- Exercise 8: Develop an accrual accounting valuation model for Wal-Mart
Module 1: Modeling Accrual Accounting Valuation
Day 5
- Review and Discussion
- Warrants and Executive Stock Options
- Exercise 1: Warrant valuation
- Exercise 2 : Value Wal-Mart Stores outstanding warrants
- Debt Valuation
- Exercise 3: Rating adjusted yield-to-maturity
- Exercise 4 : Expected debt return
- Exercise 5: Expected cash flow and return on debt
- Share Repurchases
- Exercise 6: Using share repurchases to calculate growth in distributions
- Exercise 7 : Sustainable growth rate
- Exercise 8: Share repurchases for comparable companies
- Presentation of Goodyear Valuation and Conclusion
Module 1: Warrants