Financial Modeling

AFM 202: Financial Modeling and DCF Valuation Training

The training outline is:

1) Introduction to Financial Modeling and Valuation 
a. Refresher on the fundamental accounting principles 
b. Trial Balance 
c. Building the Income Statement from the Trial Balance 
d. Building the Balance Sheet Statement from the Trial Balance 
e. Building the Cash Flow Statement from the Trial Balance 
f. Introduction to Financial Ratios 

2) Building a Financial Model Template from Scratch 
a. Template Building from Scratch 
i. Creating the Required Sheets and Having an Index Sheet 
ii. General Model Structure Design 
iii. Working Across Multiple Sheets at Once 
iv. Linking Sheets 
v. Absolute and Relative References 
vi. Template Building Tricks 
b. Required Excel Tools and Formulas 

3) The Financial Model Core
a. Modelling Stage One: Projection Ratios and Scenarios (Optimistic, Base and Pessimistic) 
i. Income Statement Drivers Projections – from schedules or moving average
ii. Balance Sheet Drivers Projections – from schedules or moving average
b. Modelling Stage Two: Financial Statements Forecasts 
i. Income Statement Forecast 
ii. Balance Sheet Forecast 
iii. Cashflow Statement Forecast – extracting the Cashflow from Income Statement & Balance Sheet
iv. Extracting the Unlevered Free Cashflow

4) Different Types of Valuation Models
a. Discounted Cash Flow (DCF) Model 
b. Comparative Company Analysis (comps) Model (and precedent transaction valuation multiples)
c. Sum-of-the-parts Model 
d. Leveraged Buy Out (LBO) Model 
e. Merger and Acquisition (M&A) Model 
f. Book value Model 
g. Depreciated Replacement Cost (DRC)
h. Dividend Discount Model

5) DCF Valuation 
a. Enterprise Value = Discounted Cashflow of Explicit Forecast Period + Discounted Terminal Value 
b. Calculation of WACC, CAPM and Cost of Debt 
c. Practical Reality of the Nigerian Economic Space 
d. Extracting The Equity Value from The Enterprise Value 
e. Sensitivity Analysis: WACC vs Perpetuity growth 
f. Practical Use of The Results 
g. Company Valuation: Sell-side, Buy-side and Advisory 
h. Business Unit or Subsidiary Valuation 
i. Capital Project Valuation 

6) Financial Ratios 
a. Liquidity Ratios 
b. Asset Management Ratios 
c. Leverage Ratios 
d. Profitability Ratios 
e. Valuation Ratios 
f. Financial Project Planning Excel formulas 

AFM 101: Finance and Financial Statements for non-Finance Managers & Entrepreneurs

The training outline is:

Introduction to Accounting and Finance

• Accounting Equation: Assets = Liabilities + Equity
• Debits and Credits
• Assets – its true corporate meaning ( + = debit, – = credit)
  • Depreciable fixed tangible assets
  • Intangible assets and goodwill
  • Financial assets
  • Deferred tax assets
  • Prepayments
  • Inventory
  • Receivables
  • Cash
• Liabilities – getting it right, corporate finance wise ( – = debit, + = credit)
  • Loans
  • Provisions
  • Employee benefit obligations
  • Payables
  • Tax liabilities
  • Other liabilities
• Equity
  • Share capital
  • Share premium
  • Retained Earnings, cumulative Net Profit (Revenue – Expenses, cumm)
    • Revenue ( – = debit, + = credit)
    • Expenses ( + = debit, – = credit)
  • Reserves ( – = debit, + = credit)

Understanding Internal Financial Reports

• Chart of Accounts (what to debit and what to credit)
  • Assets
  • Liabilities
  • Shareholder’s equity
  • Revenues
  • Expenses
  • Gains
  • Losses
• General Ledger (GL)
• Cost Centres
• Accrual based accounting
  • Depreciation
  • Amortization
  • Interest Expense
  • Prepayments
  • Prepaid/Unearned/Deferred Revenue
  • Tax Computation – accounting tax vs government tax
• Trial Balance – adjusted/accrual based

Understanding Financial Statements

• Income Statement (Statement of Profit or Loss)
  • Functional and practical interpretation
  • Income Statement ratios for company financial health analysis
• Balance Sheet (Statement of Financial Position)
  • Functional and practical interpretation
  • Balance Sheet ratios for company financial health analysis
  • Company Efficiency
  • Working Capital Management
• Cashflow Statement (Statement of Cashflow)
  • Functional and practical interpretation
  • Cashflow Management
  • Free Cashflow
• Investment Decisions
• Financial Planning

AFM 303: AFM Masterclass + Mock Exam

For the training, we expect prior knowledge of Financial Modeling and that participant has hands-on knowledge of financial model building from scratch.

The main focus of the training is to prepare the participants for the more rigorous type required for the AFM exam.

The Masterclass covers the official Study Guide and Mock Exam:

• Model Structure
• Formatting and color scheme
• Input Assumptions and Forecast Plans
• Revenues
• Operating Costs and Depreciation Expense
• Income Tax Expense and Working Capital
• Debt, Interest and Shareholders’ Equity
• Financial Statements
• Summary Page, Formatting, Presentation and Speed
• Model Troubleshooting, Fixed Errors and Avoiding Pitfalls
• Mock Exam

Duration: 4 days