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Introduction to Financial Modelling

Overview

The “Introduction to Financial Modeling” course is a composite of four courses, namely:

  1. Ratio Analysis
  2. Corporate Finance: First Course
  3. Credit Analysis
  4. Cash Flow Summary and Cash Flow Analysis

Ratio Analysis covers the following topics:

  • Identification and explanation of terminology used in Ratio Analysis
  • Introduction to ratios- ratios for trend analysis, ratios for comparative analysis, financial management insights provided by ratios
  • Liquidity, leverage productivity and profitability categories of ratios
  • Case study for Office Depot
  • Comparative Case study for Office Depot and Staples

Corporate Finance-First Course covers the following topics:

  • Review of financial concepts such as important definitions, forms of ownership, financial statements, financial statements
  • Detailed review of financial statement components such as assets, liabilities, depreciation, net working capital, income statement
  • Review of Risk and Return
  • An overview of the time value of money concept including a look at discounting and calculating the present values of cash flows
  • Calculation of the Internal Rate of Return (IRR)
  • Understanding Opportunity Cost and Cost of Capital and calculating WACC
  • Case Study for Electronic Arts for Valuation and Projections

Credit Analysis covers the following topics:

  • Focus on the impact of leverage on earnings
  • Breakeven analysis and Margin of Safety calculations
  • Operating and Financial Leverage Calculations
  • Degree of Operating Leverage and Degree of Financial Leverage Calculations

Cash Flow Summary and Cash Flow Analysis covers the following topics:

  • Stage-by-stage construction of cash flow summary with accompanying quantitative and qualitative analysis
  • How the cash flow summary aids in the preparation of a cash flow statement

Objectives

After reviewing this course you will be able to:

  1. Understand the different categories of ratios and the various questions that they may be used to answer.
  2. Understand how to calculate the ratios from the financial statements.
  3. Understand how to interpret the ratios over time (trend analysis) and across industry (industry and comparative analysis).
  4. Understand how to set future assumptions
  5. Understand how to project pro-forma financial statements
  6. Understand how to calculate the cost of capital
  7. Understand how to value or calculate the right price for a given business
  8. Understand how to calculate the impact of leverage on earnings
  9. Understand how to prepare a cash flow summary to assess a given company’s cash flows

The most recent annual reports for Office Depot and Staples  may be obtained from the following links:

Office Depot

http://investor.officedepot.com/phoenix.zhtml?c=94746&p=irol-reportsannual

http://phx.corporate-ir.net/External.File?item=UGFyZW50SUQ9ODg1NzF8Q2hpbGRJRD0tMXxUeXBlPTM=&t=1

Staples

http://investor.staples.com/phoenix.zhtml?c=96244&p=irol-reportsannual

http://thomson.mobular.net/thomson/7/3218/4495/

If you would like to buy the “Introduction to Financial Modelling” course as a pdf file, please see the Corporate Finance section at our online finance course store. The online finance course store includes easy-to-read-and-work-with downloadable pdf files, excel templates and ready-to-work with models that are shared to illustrate usage and speed up learning for advanced financial modeling, forecasting and simulation topics including interest rate forecasting and simulation, value at risk analysis, credit analysis and processes, Internal Capital Adequacy Assessment Process (ICAAP), asset liability management and other related middle office and risk and computational finance topics.

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