Digital Learning Platform

Delegates will learn how to calculate and interpret key operating and performance metrics used in valuation and credit assessment. The course will also show delegates the most common accounting adjustments made to these metrics to make them comparable across companies with interesting corporate structures, for example involving pension deficits and leasing for example. This course is equally relevant to people in management and accounting in a corporate context and analysts, investors and managers in banks and financial institutions.

You will progressively build an integrated balance sheet, profit and loss, and cash flow forecasting model. We will also build a discounted cash flow valuation and sensitivities to make it useful as a credit analysis, debt structuring and capital structure optimisation tool. The model is of Unilever and gives an interesting insight into the drivers behind the Kraft-Heinz bid and how the market valuation has closely tracked the DCF valuation implied from Management’s guidance to equity researchers.

The key to our technique of integrated model building is “Building in Balance”: using the basic principles of double entry book-keeping and carefully choosing the order in which we build and integrate we ensure that our forecasts balance from the beginning and stay in balance as we go. “Building in Balance” also gives us some simple troubleshooting tools to “shake-out” errors as soon as they arise, leading to a robust, error-free model straight out of the box.

The training will develop your Excel skills and show you how to reliably quickly and accurately build rigorous, flexible financial models. You’ll understand the flow and logic of typical forecasting models and you’ll be able to get more out of the peer/third party models you use.

The model we’ll build is highly flexible, so it will allow you to model “old-school” A,B loan and mezzanine structures, unitranche financings and mixed loan and high yield bond schemes.

The model will produce all of the main return metrics that P/E investors use and the standard credit risk metrics that potential debt investors will use. We will also produce a value bridge – disaggregating returns into their various drivers: sales growth, operating margin expansion, debt paydown, “multiple arbitrage” and fees.

Simple models like this one are excellent tools to give you insight into what drives the economics (or lack of!) in a deal. This is precisely the sort of model you might build as part of your investment banking induction programme (or indeed you might discover it’s the “standard model” in your department – albeit with a few formatting changes). We hope you enjoy the programme.