Corporate Valuation Modeling : A Step-by-Step Guide

by Keith Allman

• ISBN13: 9780470579374
• ISBN10: 0470579374
• Format: eBook
• Copyright: 2010-01-01
• Publisher: Wiley

Summary

A critical guide to corporate valuation modelingValuation is at the heart of everything that Wall Street does. Every day, millions of transactions to purchase or sell companies take place based on prices created by the activities of all market participants. In this book, author Keith Allman provides you with a core model to value companies.Corporate Valuation Modeling takes you step-by-step through the process of creating a powerful corporate valuation model. Each chapter skillfully discusses the theory of the concept, followed by Model Builder instructions that inform you of every step necessary to create the template model. Many chapters also include a validation section that shows techniques and implementations that you can employ to make sure the model is working properly. Walks you through the full process of constructing a fully dynamic corporate valuation model A Tool Box section at the end of each chapter assists readers who may be less skilled in Excel techniques and functionsComplete with a companion CD-ROM that contains constructed models, this book is an essential guide to understanding the intricacies of corporate valuation modeling

Table of Contents

Preface

Acknowledgments

About the Author

Introduction

Overview of the Corporate Valuation Process

A Conceptual Road Map

A Technical Road Map

A Few Best Practices Regarding Financial Modeling

How This Book Works

Initial Settings and Assumptions Sheet Set Up

Toolbox: Naming Cells

Dates and Timing

The Need for a Flexible System

The Forecast Period

The Terminal Period

Historical Time Periods

Event Timing

Dates and Timing on the Assumptions Sheet

Introducing the Vectors Sheet

Summary of Dates and Timing

Toolbox

Revenue, Costs, & the Income Statement

Revenue

Three Methods for Estimating Revenue Based on Historical Data

Costs

Organizing Revenue and Cost Assumptions for Scenario Analysis

Installing an Excel Based Scenario Selector System

Bringing Revenues and Costs Together: The Income Statement

Integrating the Income Statement

A Work In Progress

Toolbox

Capital Structure and Balance Sheet

What the Company Owns

Starting the Balance Sheet with Assets

What the Company Owes

Continuing the Balance Sheet with Liabilities

What the Company Has Already Paid For

Continuing the Balance Sheet with Equity

Toolbox: Be Careful with Growth

Capital Expenditures, Depreciation, Intangibles, and Amortization

Capital Expenditures

Depreciation

A Balance Sheet or Income Statement Item?

Concept Status

Capital Expenditure Schedules Set Up

Depreciation Schedules Set Up

Intangibles

Amortization

Intangibles and Amortization Schedules

Income Statement and Balance Sheet Effects

Integrating Capital Expenditures, Depreciation, Intangibles, and Amortization

Toolbox

Long Term Debt

What is Long Term Debt?

Using Debt for a Reason

Modeling Debt: Debt Components in Detail

Setting Up Debt and Calculating What is Due

Paying Liabilities

Paying the Correct Liability Amount

Integrating Long Term Debt into the Income Statement and Balance Sheet

Toolbox

Balancing the Model

Calculating Cash and Short Term Debt Interest

Working with the Model

The Model as an Analysis Tool

Toolbox: Excel's Calculation Modes

Reconciling Cash Flow

The Cash Flow Statement

Working Capital

Calculating Working Capital

Building the Cash Flow Statement

Preventing Error through Internal Validation

Implementing Internal Validations

Other Validations

Toolbox

Free Cash Flow, Terminal Value, and Discount Rates and Methods

Free Cash Flow: A Matter of Perspective

Implementing Free Cash Flow

Terminal Value: Beyond the Forecast Period

Calculating and Integrating a Stable Growth Terminal Value

Discount Rates and Methods

Calculating and Implementing the Weighted Average Cost of Capital

Discounting with Multiple Rates to Determine the Corporate Value

After the Corporate Valuation

Toolbox

Weighted Averages Using SUMPRODUCT and SUM

Present Value Functions: PV, NPV, XNPV

Discounting Process with Multiple Rates

COVAR, VAR, and VARP for Beta Calculation

Output Reporting

Output Summary

Preparing for the Output Summary Sheet

Web Downloads

Connecting the Example Model to the Web

Creating the Output Summary Sheet

Charts

Creating Dynamic Charts

Toolbox

Automation Using Visual Basic Applications (VBA)

The Object Oriented Programming Language (OOP)

Follow the Rules

The Visual Basic Editor

Writing Code: Subroutines and Functions

Understanding VBA Code and Practicing Coding Techniques

Moving Data Using VBA

A First Look at Loops and Variables in VBA

Common Errors for First Time VBA Programmers

VBA within a Financial Modeling Context

Eliminating Circular References

Creating a Scenario Generator

Automatic Sheet Printing

Continuing with VBA

Conclusion

About the CD-ROM

Index

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