Syllabus
Contents1) Introduction - overview of the course, discussion of the literature, specification of the requirements, company valuation framework2) Valuation Models - primary exposition of the kev valuation models: comparable multiples, discounted dividend model, discounted cash flow model, residual income model3) Accounting Reorganization - key accounting relationships, reclassification of accoutning figures, invested capital, net operating profit less adjusted taxes, free cash flow4) Financial Analysis - construction of financial ratios, return on equity, return on invested capital, financial leverage & spread, asset turnover, operating profit margin5) Cost of Debt - fundamental differences in the cost of capital, effective interest rate, component approach, yield to maturity (YTM)6) Cost of Equity - estimating CAPM, determination of equity market risk premium, estimating beta, 3-factor model7) Weighted Average Cost of Capital (WACC) - financial structure, target vs. historical weights8) Comparable Multiples - book-to-market ratio, earnings-to-price ratio, ebita-to-enterprise value ratio9) Free Cash Flow (FCF) - construction, forecasting operating profitability, tax rates, changes in invested capital10) Qualitative Analysis - macroeconomic analysis, Porter's analysis, SWOT analysis11) Forecasting - value drivers, forecasting of growth, forecasting of profitability12) Horizon - determining horizon growth and profitability, continuing value13) Value Estimate - discounting, determining per share value, sensitivity analysis, buy-hold-sell recommendation Files (CVL23, JEM132, IES FSV UK, Company Valuation) | Google Diskhttps://drive.google.com/drive/folders/1Q1i5VWnHDdekEnHfAWMq_FosMk1ska1Q?usp=sharing Valuation
2.10 - Class CVL23 - Heineken (JN, 2023-08-31) | Google Sheets Valuation Modelhttps://docs.google.com/spreadsheets/d/1lrz29yVMU_nAzadBHHFiaGmVk74rgsyjTHXYPbw4mYI/edit#gid=1506343329
Annotation
The course introduces students to financial analysis and company valuation. The exposition starts with the discussion of the conceptual points of departure that constitute the basis for rigorous financial analysis and valuation. Subsequently, students are guided through the process of the construction of the discounted cash flow valuation model. Practical considerations are discussed and students learn how to apply the conceptual framework in real life setting. Finally, students put their knowledge into practice as they are asked to use their model to value an existing company and interpret the results.
The course is primarily intended for four-year and fifth-year students. Bachelor’s level students are welcome to take the course after an agreement with the instructor. The course is suitable for students who aim to take the CFA Exams or to participate in the CFA Research Challenge. We recommend (but do not strictly require) students to take the following courses before they take Company Valuation (JEM132): Financial Accounting (JEB044), Financial Management (JEB045), Asset Pricing (JEM092).