“I really enjoyed the Valuation Module because it helped me understand what a discounted cash flow analysis was from the bottom up. It also helped me understand valuation multiples and the different methods to value a business.”

Valuation Module

The Valuation Module enables trainees to expand their financial modeling skills and learn valuation concepts. This module beings with a presentation that reviews basic concepts of relative and intrinsic valuation. With regard to relative valuation, trainees will learn which valuation metrics are important and how to utilize a comparables analysis.  Additionally, trainees learn how to avoid pitfalls that may occur in relative valuation.  With regard to intrinsic valuation, trainees learn the basics of a discounted cash flow valuation, including time value of money concepts, calculating discount rates and several generally accepted methodologies for determining terminal valuation. After the presentation, trainees build a fully discounted cash flow model and a summary valuation analysis (or “football field”) from scratch.

The Valuation Module is designed for trainees who have already participated in our Financial Modeling Course. It typically lasts approximately two hours. Trainees will use the financial model they have built in the Financial Modeling Course as a starting point for the entire analysis.

Module Description

Trainees receive a 2-tab blank spreadsheet, which they copy into the financial model they have built in the Financial Modeling Course. During this course trainees:

  • Calculate the present value of the projection period
  • Determine terminal value using the perpetuity growth rate method
  • Determine terminal value using the exit multiple method
  • Value the company by comparing the results of the discounted cash flow analysis with trading comparables, transaction comparables and the current stock price of the company in a summary valuation analysis (or “football field”)
  • Analyze the “football field” and arrive at conclusions on the valuation of the target based on the valuation data points compiled