Financial Modeling Foundations (LinkedIn Learning)
https://www.linkedin.com/learning/financial-modeling-foundations
https://www.linkedin.com/learning/certificates/61b4251cb70b473f8b1820d156848110144fdf6450252fca362d9706a6d36749
Financial models should: Be simple Focus on key cash flow drivers Convey assumptions and conclusions Help evaluate risks through: Sensitivity analysis Break-even analysis Scenario analysis Types of models Comparison Deterministic (known inputs, precise outputs) vs stochastic (probability-based, Monte Carlo simulations; more complex)
Three Statement Model DCF Model Buyout Model Valuation from model Present value of discounted free cash flow or multiples lnvestment decision and implied value depends on equity IRR versus market hurdle rate Entry multiple and acquisition premium depends on equity IRR and hurdle rate Base case risk measurement Weighted average cost of capital, multiples, terminal growth Debt capacity, debt terms Senior and subordinated debt financing and exit multiple Traditional risk assessment from equity perspective Sensitivity analysis and scenario analysis of DCF and multiple value Sensitivity analysis and scenario analysis of equity IRR Sensitivity analysis and scenario analysis of equity IRR Tradition risk assessment from debt perspective Break-even analysis to determine ability to refinance and maintain credit rating Break-even analysis to determine at what point cash flow can’t service debt Break-even analysis to determine IRR on senior and subordinated debt Monte Carlo analysis with model Probability distribution of EPS and DCF valuation Probability distribution of equity IRR and probability of DSCR below 1.0 Probability distribution of equity IRR, senior IRR and junior IRR lnformation base Historical financial statements, analysis of value drivers Contracts and analysis of commodity prices and other value drivers Historical financial statements, analysis of value drivers, transaction terms Model starting point Historic balance sheet Sources and uses analysis Sources and uses and pro-forma balance sheet Cash flow process Net cash flow after dividends that result in changes in short-term debt or surplus cash Cash flow waterfall that ultimately measure dividends paid to equity Cash flow waterfall that ends in dividends paid to equity Debt analysis New and existing New debt issues from transaction New debt issues from transaction Model termination Arbitrary terminal period End of project life Transaction holding period Model output DCF valuation, EPS projection, implied P/E, credit quality Equity IRR, project IRR, DSCR Equity and debt IRRs, debt/EBlTDA Corporate financial model (three-statement model) 02-0X, 03-0X files
