Date – 21 October 2019
Time: 10:00 A.M. Onwards
Venue: Dr. D.Y. Patil B-School College Campus
Objectives:
- To give an idea about financial modelling, its challenges and usages.
- To teach about the various valuation methods.
Speaker Details:
Mr. Abhijeet Singh
Participants Details:
25+ students attended the session.
Started with Logical fallacies, Cognitive Biases and Problem solving which has helped and to developed the base for neutral thinking or having a free mind which is needed while taking assumptions for valuing any company.
Why Financial Modelling? How does it help and where it is used and what are Industry Requirements was necessary to know before going further.
Business perspective is important to know before starting with modelling to get the assumptions linked with the business cycle, Sales Funnel, Types of CAPEX, Dividend Policy, Management Discussion, ConCalls can be used to gather these data. Based on these we develop the base to take the assumptions while modelling.
Covered too many topics of corporate finance and Financial Accounting to develop a base for building a model.
Restating was covered to get the hands-on while starting with preparing the model. Every company has different style of reporting statements which should be restated before starting with in the format to get easier while assessing the company (Could be differentiated based on operating and non-operating items).
Started with Basics of Modeling by linking the 3 statements mechanically for common size statements which further led to assumption and the related drivers which helped to gain assumptions. Further moved on to breaking the complicated components such as Assets and Depreciation by making the flat schedule to get the nearby assumption to minimise the error.
Further moved on to forecasting by implementing the taken assumption earlier and at last the balance sheet tallied. Concepts such as plug which is used widely in the industry has also been gone through.
For the Exercise “Restaurant” topic was selected to model and based on the discussion above the inputs were to be taken by the help of nearby industry data.
Modelling on Restaurant was done from scratch by building the data based on the inputs covered in the session.
Detailed Feedback on Restaurant Models of all students were given in which included (Many more components which could have been covered, Mistakes not be repeated, Different feedbacks based on the models).
Again, starting with modelling basic was covered extensively with all previous topics and add-on with Ratio analysis which was also covered earlier, major needed industry ratios were covered and ROIC tree which helped to breakdown the operating business activity to narrow down the problems which helped for identifying problem
Waterfall Schedules was created on the basis of Flat schedules (earlier used) for Assets and Depreciation to break down the different assets and their depreciation to get better assumptions.
Revenue Build-up was covered on the basis of Sales Funnel, by breaking out the sales pipeline to get the understanding of functioning of sales at every part to get better assumptions.
Valuation methods covered included Comparable, DCF topics such as Continuing Value, Enterprise DCF, WAAC, Bottom-up EV were covered.
Many exercises were covered throughout the program such as Mobile Comps, Buy-Rent and many more to develop better understanding of various topics and to get hands-on experience.
Key outcome of the activity:
The students were given an exposure to actual financial models, how it looks like, the functioning and usages. Also, the different valuation methods were taught and the credibility of methods on the basis of sector and company were explained.