Introduction

• Objectives of financial modeling
• Scope of financial models

Developing a Financial Model

• Conceptualizing the model
• Identifying key model variables
• Programming the model
• Organizing the workbook: Data, Assumptions, Results
• Allowing for flexible scenarios
• Producing reports

Case Study: Modeling a Company

• Analyzing the company data
• Designing the model
• Building and verifying the company model
• Creating the initial position
• Modeling the operating environment
• Applying accounting rules and business logic
• Creating P&L, cash flow, and balance sheet statements
• Verifying the model
• Running the model
• Generating and interpreting the results

Auditing and Problem Solving

• Checking the integrity of a financial spreadsheet
• Getting a financial spreadsheet to "balance"
• Moving from the past, through the present, and into the future: from facts to forecasts
• Dealing with part-year accounts and differing year-ends
• Auditing a spreadsheet
• Resolving circular references
• Documenting spreadsheets

Risk Analysis

• Risk and uncertainty
• Scenario analysis
• Using Excel Scenarios for different assumptions
• Sensitivity analysis
• Using Excel Data Tables to perform structured sensitivity analyses
• Monte Carlo simulation

Company Valuation

• Modeling the cash flows
• Estimating terminal value
• Exit multiples, growth models, and WACC
• Applying valuation techniques to company model

Modeling a Merger

• Target and bidder financials (historical and projections)
• Modeling implications of primary financing structures
• Incorporating synergies and sensitivities
• Analysis of key output ratios
• Modeling a Buy-out
• Modeling the financing structure
• IRR, equity ratchets and covenants
• Incorporating sensitivities