Financial & Valuation Modeling – Wall Street Prep

Financial Statement Modeling

You will develop a 3-statement model completely from scratch, inputting historical data and assumptions to project out financial statements by selecting, locating, and developing appropriate projection drivers.

AI in Practice → We’ll use AI to interrogate projection assumptions, surface logical inconsistencies in the model, and pressure-test whether the drivers you’ve chosen actually hold up — so you build with conviction, not just speed.

Review key Excel skills for financial modeling

• Basic Excel techniques and keyboard shortcuts
• The most accurate way to perform Excel’s basic functions without the mouse
• Customize Excel’s default settings for effective modeling

Learn to format and structure financial models to limit errors and simplify auditing

• Standard modeling structures and formulas
• Best practices in modeling
• Learn the correct way to check models for errors, accuracy and integrity
• Check and fix circular reference and iteration problems (#REF)
• Tools for formula checking and auditing

Learn how to present financial statement model

• Create a ratios page
• Prepare a model for distribution
• Learn summary and sensitivity analysis using data tables

Financial statement model development

• Learn to build projection drivers
• Learn to integrate assumptions into financial models – learn what makes a good assumption
• Build core statements:
  • Cash flow statement
  • Balance sheet
  • Income statement
• Build supporting schedules:
  • Debt schedule
  • Working capital
  • Interest schedule
  • Retained earnings
  • PP&E analysis
• Understand the interconnectivity of the core financial statements and learn how the cash flow statement, income statement, and balance sheet are linked.
• Learn to apply automatic “balance checks”
• Understand treatment of non-recurring charges and tax implications on financial models
• Understand implications of new FASB regulations on financial models used by investment banks and other financial institutions.

DCF Modeling

Participants learn how to value the company step-by-step, including how to estimate the weighted average cost of capital (WACC) in the real world, how to implement commonly used approaches to calculating terminal value, and how to use data tables to analyze a broad range of scenarios given different assumptions.

AI in Practice → We’ll bring AI into the valuation process to challenge key inputs, explore how sensitive your output is to WACC and terminal value assumptions, and stress-test the story your model is telling before you’re asked to defend it.

Valuation methodologies deconstructed

• Learn market-based valuation, including comparable company analysis and comparable transaction analysis using appropriate equity and enterprise value multiples (PE, EV/EBITDA, etc.)
• Intrinsic valuation, including DCF and LBO (floor) valuation
• Presentation of valuation results using sensitivity analysis and data tables

Enterprise value relationships

• Participants learn to identify and analyze the elements of the financial statement that are key to the value of an enterprise, including:
  • Market capitalization
  • Enterprise value
  • Options
  • Preferred stock
  • Minority interests
  • Debt
  • Cash and marketable securities
  • Treasury Stock Method of Calculating Diluted Shares Outstanding

Calculate free cash flows using the unlevered valuation approach

• Use previously built model to derive unlevered earnings and unlevered free cash flow
• Handle working capital items, deferred taxes and long-term accruals 

Discount the cash flows

• Learn how to derive a discount rate by deriving the cost of debt and the cost of equity
• Derive the cost of capital using CAPM
• Select the correct discount rates

Calculate the value

• Estimating terminal value
• Calculating enterprise value
• Using the enterprise value to determine implied share prices

Sensitivity analysis

• Analyze key input assumptions at various sensitivities

M&A Modeling

Participants will build a merger model in Excel to reflect the pro forma impact of various acquisition scenarios. Key topics covered include a quick test of accretion / dilution in all-stock deals, pricing structures (exchange ratios, collars, “walk-away” rights), purchase accounting, and the step-by-step allocation of purchase price.

 AI in Practice → We’ll use AI to sharpen thinking around deal structure, probe the assumptions behind accretion and dilution, and evaluate whether a transaction genuinely creates value — or just appears to on paper.

Building a robust merger model

• Setting up a control area for assumptions
• Inputting deal assumptions (% cash vs. stock considerations, purchase premium, asset write-ups, advisory fees, financing fees, and severance fees)
• Calculating shares outstanding using the treasury stock method
• Appropriate treatment of convertible securities
• Allocating purchase price and calculating goodwill
• Preparing the pushed-down balance sheet
• Making pro forma balance sheet adjustments
• Calculating sources & uses of funds
• Inputting operating & synergy projections
• Calculating the stub year period
• Building a pro forma income statement and making appropriate deal-related adjustments to arrive at accretion/dilution per share
• Error-checking a merger model and inserting circuit breaker switches where appropriate
• Sensitivity analysis: EPS accretion/dilution in stock vs. cash deal; interest rate assumptions, premium paid
• Pre-tax synergies required to break-even, and break-even PE analysis
• Revenue, EBITDA, and Net Income contribution analysis

Advanced merger accounting

• Understanding the differences between asset sales (including 338h10 elections) and stock sales
• Taxation issues, including deferred taxes created by the step-up of asset values
• Legal considerations in acquisitions