Corporate Finance Modelling & Analysis: A Practical Guide

Euromoney Trading Ltd, August 2011, Pages: 196

This book is a practical guide for those wishing to gain further skills and knowledge in the area of financial modelling and analysis for corporate finance transactions and corporate financial decisions. This is a complete corporate finance modelling and analysis reference guide that will really enhance and supplement your financial modelling and analysis skills and add value to corporate decisions at different stages of the corporations life cycle.

It will be of particular interest to banks, corporate financiers, accountants, financial modellers and consultants faced with such corporate finance decisions.

This book covers financial modelling and analysis for acquisitions, mergers, initial public offerings, rights issues, disposals, refinancing, capital structures, dividend policies, working capital management, project finance as a source of funding, private equity as a source of funding. It also includes advice on modelling different debt structures, capital investment appraisals, supplier and partner evaluations, business plans, sale and lease back, lease versus purchase and financial failure and liquidation.

It also includes financial modelling best practice, financial model audits and reviews, project management and the use of generic and template financial models, the use of different Excel functions for corporate finance calculations, the use of Excel VBA and the use of Excel risk analysis techniques.

In fact, this is a complete corporate finance modelling and analysis reference guide that will really enhance and supplement your financial modelling and analysis skills and add value to corporate decisions at different stages of the corporations life cycle.

Using numerous practical examples of Excel financial model extracts and VBA/ macro code, the reader will complete financial modelling and analysis exercises that will lead up to the completion of numerous financial transactions. This practical guide provides an excellent source for self study which cannot be obtained from training courses and on job experience alone thus making this book fantastic value for money.

About the author

Introduction

Section 1 Building the forecasting financial model
Financial modelling best practice
Scope
Designing the financial model
Layout
Layout exercise
Timeline
Timeline exercise
Capital expenditure
Capital expenditure exercise
Financing
Financing exercise
Sales
Sales exercise
Operating costs
Operating costs exercise
Working capital
Working capital exercise
Accounting
Accounting exercise
Taxation
Taxation exercise
Dividends
Dividends exercise
Equity returns and lenders’ ratios
Profit and loss account
Profit and loss exercise
Cash flow
Cash flow exercise
Balance sheet
Balance sheet exercise
Sensitivities
Sensitivity exercise
Checks
Checks exercise
Summary
Summary exercise
Finalising the existing business corporate financial model
Exercise finalising the corporate finance model
Sources of error
Self testing the model
Top level analytical review
Key output review
Flex and sensitivity review
Exercise self testing the financial model
Using the model
Disclaimers

Section 2 Corporate finance decisions
Acquisitions
Step 1 Undertake due diligence regarding the actual financial position of the target company
Step 2 Place an acquisition value on the target
Step 3 Prepare the acquirer actuals and projections
Step 4 Prepare the combined co-actuals and projections
Acquisitions exercise
Mergers
Company merger exercise
Initial public offering
IPO exercise
Rights issues
Rights issues exercise
Disposals
Disposal exercise
Refinancing
Refinancing exercise
Capital structures
Capital structures exercise
Dividend policy
Dividend policy exercise
Working capital management
Stock control exercise

Section 3 Other areas for financial modelling and analysis
Project finance as a source of funding
Key project finance areas
Dividends exercise
IFRS (IFRIC 12 concession accounting)
Financial asset accounting
Fixed asset accounting
Revenue recognition
Debt sculpting
Debt sculpting exercise
Private equity as a source of funding
Modelling different debt structures
Amortised debt schedules
Bullet debt schedules
Sculpted debt schedules
Straight line debt schedules
Debt schedules exercise
Capital investment appraisals
Capital investment appraisal exercise
Supplier and partner evaluations
Supplier and partner evaluations exercise
Business plans
Sale and lease back decisions
Negotiating by using sensitivity analysis
Lease versus buy decisions

Section 4 Additional useful Excel functions
FV
MIRR
NPER
RATE
XIRR
XNPV

Section 5 Using VBA
An introduction to Excel VBA
Protect functionality
Unprotect functionality
Menu functionality
Auto open functionality
Auto close functionality
Using a timeout facility for demo financial models
Unhide sheets
Hide sheets
Exercise Excel VBA

Section 6 Reviewing and auditing corporate finance models
Limited scope financial model reviews
Exercise self-testing your corporate finance model
Financial model audits - corporate finance models

Section 7 Financial modelling management issues
Project management
Exercise
The use of generic and template financial models
Exercise generic and template financial models

Section 8 Other approaches to risk
Data tables
Scenario manager
Goal seek
Risk exercise

Section 9 Financial failure and liquidation
Capital reconstruction
Conclusion

Glossary

David Whittaker is the Director of Modelling Solutions. He is a Chartered Management Accountant, Practising Certificate Holder and a financial modelling solutions provider, who has over sixteen years experience within financial modelling for commerce, industry, public sector and the big four financial modelling practices. He has led several financial modelling training courses and seminars for corporate finance. Modelling Solutions provide Excel-based financial modelling services to organisations for corporate finance, project finance, PPP and PFI.

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