Description

This course introduces the basic concepts of corporate finance. How are companies valued? How does an analyst determine if a company's stock is over or under valued? Why is a company a take over target? This course addresses those question and more. The first step in equity valuation begins with evaluating corporate financial statements. Balance sheet, income statement, cash flow statements and financial ratios are defined and discussed. Specific examples are used to compare companies in an industry based on their financial statements and relative financial ratios. Equity valuation ratios are defined and calculated, including the Price Earnings ratio (P/E), the Price/Book Value ratio (P/BV), the Price/Cash Flow ratio (P/CF), the Dividend Yield (DY) and the Total Return (TR). The concepts of risk premiums and the risk free rate are introduced. An overview of equity pricing models follow and includes:

• Capital Asset Pricing Model
• Arbitrage Pricing Theory
• Dividend Discount Model

Dividend payouts and Returns on Equity (ROE) are discussed. The course will finish with an introduction to discounted cash flow (DCF) as a method of company valuation. Weighted average cost of capital is also introduced.

Objectives

By the end of the course, the participant will be able to:

• Evaluate financial statements including balance sheet, income, and cash flow statements
• Calculate and interpret financial ratios
• Understand and calculate equity valuation ratios including P/E, P/BV, P/CF, DY and TR
• Define risk premiums and the risk free rate
• Understand equity pricing models
• Calculate and evaluate CAPM, APT and DDM
• Define dividend payout and ROE
• Understand the discounted cash flow methodology
• Calculate weighted average cost of capital (WACC)

Who Should Attend

This course is for people who are new to the areas of investment banking, corporate analysis, and equity research.