Corporate Finance Learning® on LinkedIn: Discounted Cash Flow -  like a piece of cake. Credits to Bojan Radojicic… | 11 comments (2024)

Discounted Cash Flow

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How can this be used in the banking industry?

I cannot stress enough how important Financial Modeling is!If you are a finance student, it is CRUCIAL for you to learn financial modelingBut what is Financial Modeling?Financial Modeling, in layman's terms, is the forecast of the financial and operational data of an entity based on past performance and future assumptionsFinancial models are extensively used as decision-making tools and in estimating the valuation of a businessBut why is it SO important?Have a look at the roles that require financial modeling skills:1) Investment banking - build models for M&A, LBO, IPO and many more transactions2) Equity Research - use financial models for in-depth stock research3) Financial Planning and Analysis (FP&A) - use financial models to evaluate business performance and make budgets4) Credit Analysis - use financial models for valuation and risk analysis of borrowing entities5) Project Finance - use financial models to conduct feasibility and viability studies of a projectThe scope of Financial Modeling is extensive and is one of the most in-demand rewarding skillsLearn this skill and increase your worth as a finance professional#education #finance #financialanalysis #financialmodeling #investmentbanking #skills

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If you have doubts related to 'Financial Modelling' just ask! Before choosing finance as my major in MBA I had lot of doubts even I did not know about 'Debt' and 'Equity'🤭 after that I just read alot and cleared basic concepts theoretically.Then, I tried to learn 'Financial Modelling' which again was the major challenge and that time i had no one who can guide me and clear my doubts.But now I feel I have some knowledge which I can utilize to clear the doubts of someone like me😅So, In my connections or anyone if you have doubts related to 'Financial Modelling' just simply ping me.I'll try to respond at the first available opportunity and last thing don't use 'Sir', only 'Sunny'😄.#financialmodelling

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Your financial model is only as good as its inputs.Building a Financial Model is important.But your analysis of the business is even more so. Many students spend a lot of time trying to master the Excel part of financial modelling. And do not get me wrong, it is a very important skill.But it is not the end goal. The end goal is to build an ability to analyze a business. Financial Modeling is a means to get there. It is a tool to support your thinking. Not the other way round. A lot more effort needs to go into analysis of the business, and its key drivers. The value in analysis and investing is in understanding the business nuances. Otherwise – everyone is looking at the same data and making similar modelsSo when you build the next model, ask yourself these questions- How does the business run- How big is the opportunity to grow?- The assumption for sales growth at 10% - how does that come. Can it be higher or lower? Why?- Why should I assume certain margins? Is the cost structure completely in control of the firm?- How would the business maintain margins?- Is the cost of capital calculated making sense?- How would capex impact this business?We may not have answers to these when we build the financial model. But without asking, we will never even look for the answers.Whenever I am teaching Valuation - I suggest that we do not look at the financial model as an end goal of your work. It is the beginning of your analysis of a company. And a good model should give you directions as to where should you look in the business. ------------I write to help students build a career in #valuation and #investmentbankingFollow me (Peeyush) and stay tuned 🔔 for future posts

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Financial Modelling is a tool on which an analyst can construct the research based practical solutions to ascertain business growth.

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Valuation methodologyCredits to Bojan Radojicic follow him for more finance insights!~~~~~~~~~𝘏𝘦𝘳𝘦'𝘴 𝘵𝘩𝘦 𝘰𝘳𝘪𝘨𝘪𝘯𝘢𝘭 𝘱𝘰𝘴𝘵:Valuation methodology explained simply.What is in it?Income approachThis approach is based on the idea that the value of a company is directly related to its ability to generate income.𝗠𝗲𝘁𝗵𝗼𝗱𝘀DCF methodCap of earningsExcess earning method𝗠𝗮𝗿𝗸𝗲𝘁 𝗮𝗽𝗽𝗿𝗼𝗮𝗰𝗵This approach assumes that the value of a company is closely related to the prices of comparable companies in the market.𝗠𝗲𝘁𝗵𝗼𝗱𝘀Precedent transactions methodComparablescompany methodMarket price method𝗖𝗼𝘀𝘁 𝗔𝗽𝗽𝗿𝗼𝗮𝗰𝗵This approach is based on the principle that the value of a company is equal to the sum of its assets𝗠𝗲𝘁𝗵𝗼𝗱𝘀Net book valueReplacement costs~~~~~~~~~𝗗𝗢𝗪𝗡𝗟𝗢𝗔𝗗 𝗟𝗜𝗡𝗞: https://lnkd.in/d8Mkn54e_________________________𝗩𝗮𝗹𝘂𝗮𝘁𝗶𝗼𝗻 - 𝗗𝗼 𝗜𝘁 𝗬𝗼𝘂𝗿𝘀𝗲𝗹𝗳: This is the name of my new course, launching on April 15th, 2024.Join the waitlist and secure a 70% discount: https://lnkd.in/dK2Vjy6CMeanwhile, be prepared and practice our Finance modeling course: https://lnkd.in/d3kbhdJmHappy practicing!__________________________

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Believe nothing. Believe no one. Demand evidence. This is one of the life lessons I've learned over 30+ years as a financial analyst that I shared to my students and now I want to share them with you in this... Webinar: Life Lessons of a Financial AnalystNov 29, 2023 at 19:00 (GMT+7/ICT) Seats are limited, so register for free now: https://lnkd.in/gJdYauNK#ValuationMasterClass #financialanalyst #valuation #finance #investmentbanking #business #assetmanagement #fundmanager------------------Valuation is a negotiationFinance adds no valueFinance is a mirrorMaximize value, not profitNo one can consistently predict the futureBelieve nothing. Believe no one. Demand evidence.Advice to CEOs: Don’t follow to investorsAlways have on-time and accurate monthly financial statementsGlobal average profit margins: Gross margin 30%, EBIT margin 10%, net margin 6%Always answer the question, “Cui bono?” (who benefits?)To succeed, a start-up needs to get to US$7.5m as fast as possibleRevenue equals price times quantityYou will rarely get rich from working harderValuing a company is 70% forecasting and 30% valuationIndividual KPIs could possibly be the most destructive management tool ever createdNothing good comes easyDoing hard things makes life easierWinners slightly, but consistently, outperform their peersFirst place is only slightly better than second, but rewards are 10x betterThe job of a financial analyst is to think independentlyCaveat emptor (Let the buyer beware)Knowledge does not guarantee wisdomRight or wrong, people rarely change their mindBeing first is more impactful than being rightRevenue is proof of concept; profit is proof of competenceWeak minds hold strong opinions, strong minds hold weak opinions

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Discounted Cash Flow (DCF) Modelling

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Want to Build a career in Equity Valuation?25 questions you should prepare for..Share this post with your network.Here are the questions. ▶️ General ◀️- What are the most important factors to consider when analyzing a business- How do you determine a company's competitive advantage- Walk me through your#investmentthesis on a recent stock pick- How do you identify potential risks to a company's growth prospects- Discuss a time when you made an investment recommendation that didn't work out as expected▶️ Industry Analysis and Financial Statement Analysis ◀️- How do you go about doing Industry Analysis- What frameworks can be used for Industry Analysis- Should Working Capital be Negative or Positive- Is a declining ROE always bad for a business- Explain Dupont Analysis▶️#ValuationConcepts ◀️- What is the difference between FCFF and FCFE- Calculate FCFE and FCFF- When to use FCFE and FCFF- What is Enterprise Value- What is WACC- Why do some companies trade at higher P/E ratios as compared to others- Why do we use EV/EBITDA in some sectors- Why do we use P/B in Banking Sector- What is beta and how do we calculate it- How to calculate Beta for unlisted companies- Can Cost of Debt by higher than Cost of Equity- How to identify revenue drivers of a business- How to treat cash in Valuation Modeling- Can Beta be negative- Is Price to Sales a consistent metricIf you are interested in a career in Equity Valuation, you may also find our flagship program - the Analyst Program useful. All the above questions and more are covered in this 3 month long program.Over the course of 10 weeks, we cover detailed Valuation Modeling and Financial Analysis exercises on 5 different companies in the Indian markets. With weekly live sessions, you get a guided approach to Valuation, the way Sell side Analysts do.More details on my profile.You can apply for the next cohort herehttps://lnkd.in/fJs-AEt---I try to teach practical#financeconcepts through my writing and courses.Do check out my earlier posts.

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