OBJECTIVES

  • Gain an overview of the wide set of issues to consider when engaging on a modelling project.
  • Understand how to make high quality decisions.
  • Learn how to build models to maximise decision quality.
  • Ensure that the models built are as effective as possible in decision support.

DESCRIPTION

  • OverviewThis course covers some essential tools and methods to analyse business performance, and conduct valuations. The first part focusses on the definitions and used of ratio analysis to measure profitability, operating performance, and financial positioning, as well as the associated topics of Dupont analysis, and variance analysis. The second part covers the essential aspects of valuing corporations and equity using comparables and cash flow methods, also introducing the topics elements of discounting, annuities and terminal values.
  • Practical work and exercises. Students are required to conduct numerous hands-on modelling exercises and can also follow along by replicating other examples that are shown in the text
  • Assessment tests. There are several tests which cover both the key concepts and require one to do practical exercises in Excel.

KEY TOPICS

  • Ratio analysisKey ratios for measuring profitability, operating performance, efficiency, financing and gearing, and solvency. Definitions and variations. Creating consistent measures.
  • Dupont analysis and variance analysis. Decomposition into two or more factors. Normal and logarithmic scales. Two-factor variance analysis. Symmetric and non-symmetric approaches.
  • Business valuation. Valuation of corporations and equity. Using comparables and multiples. Capital structure. Cash flow methods. Introduction to discounting. Annuity formulas. Linking long- and short-term forecasts.

II.d Essentials of Business Analysis and Valuation

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