Financial Modeling and Valuation

  1. Valuation Methodologies
    1. Intrinsic Valuation: Discounted Cash Flow Analysis
      1. DCF Conceptual Framework
        1. Principles of Intrinsic Value
          1. Time Value of Money Application
            1. Applicability and Limitations
              1. DCF vs Market-Based Valuation
              2. Free Cash Flow Calculation
                1. Free Cash Flow to the Firm
                  1. Starting with EBIT
                    1. Tax Adjustments
                      1. Depreciation and Amortization Add-Back
                        1. Capital Expenditure Deduction
                          1. Working Capital Change Adjustment
                          2. Free Cash Flow to Equity
                            1. Starting with Net Income
                              1. Non-Cash Adjustments
                                1. Capital Expenditure and Working Capital
                                  1. Net Debt Changes
                                2. Weighted Average Cost of Capital Calculation
                                  1. Cost of Equity Components
                                    1. Capital Asset Pricing Model
                                      1. Risk-Free Rate Selection
                                        1. Equity Risk Premium
                                          1. Beta Estimation
                                            1. Regression Beta
                                              1. Comparable Company Beta
                                                1. Unlevered and Relevered Beta
                                              2. Cost of Debt Components
                                                1. Pre-Tax Cost of Debt
                                                  1. After-Tax Cost of Debt
                                                    1. Credit Spread Analysis
                                                    2. Capital Structure Weights
                                                      1. Market Value of Debt
                                                        1. Market Value of Equity
                                                          1. Target vs Current Capital Structure
                                                          2. Tax Shield Calculation
                                                          3. Cash Flow Forecasting and Discounting
                                                            1. Explicit Forecast Period
                                                              1. Forecast Period Length
                                                                1. Annual vs Quarterly Projections
                                                                2. Mid-Year Convention
                                                                  1. Present Value Calculation
                                                                  2. Terminal Value Calculation
                                                                    1. Gordon Growth Method
                                                                      1. Terminal Growth Rate Selection
                                                                        1. Perpetuity Value Formula
                                                                        2. Exit Multiple Method
                                                                          1. Multiple Selection
                                                                            1. Terminal Year Metrics
                                                                            2. Terminal Value Considerations
                                                                            3. Enterprise and Equity Value Calculation
                                                                              1. Enterprise Value Calculation
                                                                                1. Net Debt Adjustment
                                                                                  1. Other Adjustments
                                                                                    1. Minority Interests
                                                                                      1. Preferred Stock
                                                                                        1. Other Non-Operating Assets
                                                                                        2. Equity Value per Share
                                                                                      2. Relative Valuation: Comparable Company Analysis
                                                                                        1. Comparable Company Analysis Framework
                                                                                          1. Market-Based Valuation Principles
                                                                                            1. Relative vs Intrinsic Valuation
                                                                                              1. Strengths and Limitations
                                                                                              2. Peer Group Selection
                                                                                                1. Industry Classification
                                                                                                  1. Business Model Similarity
                                                                                                    1. Geographic Considerations
                                                                                                      1. Size and Scale Factors
                                                                                                        1. Growth Profile Matching
                                                                                                        2. Financial Data Collection
                                                                                                          1. Market Data
                                                                                                            1. Current Share Price
                                                                                                              1. Shares Outstanding
                                                                                                                1. Market Capitalization
                                                                                                                  1. Enterprise Value Calculation
                                                                                                                  2. Financial Statement Data
                                                                                                                    1. Revenue Metrics
                                                                                                                      1. Profitability Metrics
                                                                                                                        1. Balance Sheet Items
                                                                                                                      2. Trading Multiple Calculation
                                                                                                                        1. Enterprise Value Multiples
                                                                                                                          1. EV/Revenue
                                                                                                                            1. EV/EBITDA
                                                                                                                              1. EV/EBIT
                                                                                                                              2. Equity Value Multiples
                                                                                                                                1. Price-to-Earnings Ratio
                                                                                                                                  1. Price-to-Book Ratio
                                                                                                                                    1. Price-to-Sales Ratio
                                                                                                                                  2. Multiple Analysis and Application
                                                                                                                                    1. Statistical Analysis
                                                                                                                                      1. Mean and Median
                                                                                                                                        1. Quartile Analysis
                                                                                                                                          1. Outlier Treatment
                                                                                                                                          2. Multiple Selection
                                                                                                                                            1. Target Company Application
                                                                                                                                            2. Valuation Range Derivation
                                                                                                                                            3. Relative Valuation: Precedent Transaction Analysis
                                                                                                                                              1. Precedent Transaction Framework
                                                                                                                                                1. Transaction-Based Valuation
                                                                                                                                                  1. Control Premium Considerations
                                                                                                                                                    1. Use Cases and Limitations
                                                                                                                                                    2. Transaction Selection Criteria
                                                                                                                                                      1. Industry and Sector Relevance
                                                                                                                                                        1. Deal Type Similarity
                                                                                                                                                          1. Transaction Size
                                                                                                                                                            1. Transaction Timing
                                                                                                                                                              1. Deal Structure
                                                                                                                                                              2. Transaction Data Collection
                                                                                                                                                                1. Transaction Value
                                                                                                                                                                  1. Deal Terms and Structure
                                                                                                                                                                    1. Premium Analysis
                                                                                                                                                                      1. Synergy Assumptions
                                                                                                                                                                      2. Transaction Multiple Calculation
                                                                                                                                                                        1. Enterprise Value Multiples
                                                                                                                                                                          1. Equity Value Multiples
                                                                                                                                                                            1. Premium Analysis
                                                                                                                                                                            2. Multiple Application to Target
                                                                                                                                                                              1. Transaction-Based Valuation Range

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                                                                                                                                                                            4. Building a Three-Statement Financial Model

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                                                                                                                                                                            6. Advanced Modeling and Analysis