Building DCF Models in Practice

2021/2022

Academic Year

ENG

Instruction in English

3

ECTS credits

Delivered at:

HSE Banking Institute

Course type:

Elective course

When:

2 year, 2 module

Course Syllabus

Abstract

Long-term projects require a thorough analysis, negotiations with investors, lenders, and partners. The financial model in MS Excel is the most important tool for planning, structuring, and analysis of a project. Here you pull up and summarize all available information on your expectations and forecast. Quality of your model defines the precision of your decisions and your ability to convince the other participants of the project. In this course you will learn how to build for your project a financial model with all reports and ratios that used in project finance. We will go through the path from a blank Excel workbook, discuss the best practice for financial modeling, dig into technical and financial aspects of the methods and ratios that we use in the model. Within the course we will work with a typical project finance model, but this model has a wide range of possible applications. The same structure and principles could be used for any project to create a new business, launch a product or for venture investments. You will see that the approach we use is universal and the model we build in the course can be your template for many future projects. The course is aimed at students with some experience in Excel. We will not be learning the basics of spreadsheets or MS Excel interface, but all special functions and services will be presented and explained before we use them in our model. All stages the development of the model will be supplemented with Excel files, so by the end of the course you will have both new skills and ready professional financial models. During the last week of the course you will develop your capstone project – your own financial model.

Learning Objectives

• The goal of the course is to provide practical skills in financial modelling of investment projects by discussing best practice with the teacher as well as students work on their own projects.

Expected Learning Outcomes

• After the course, students will have necessary knowledge and skills to build a fully fledged financial model for a project or a company. The model can be used to support investment decisions, raise capital or apply for debt financing.

Course Contents

• Basics of financial modelling
• Sales, OPEX, CAPEX, working capital, taxes
• Financial reports in the model
• Financing: loans, lease. Ratios
• Discounted cash flow analysis
• Scenario analysis

Assessment Elements

• project with a new business
• final project

Interim Assessment

• 2021/2022 2nd module
  0,7 develop a financial model + 0,3 build a full-blown scenario analysis section/build a multi-stage cap table

Bibliography

Recommended Core Bibliography

• Aswath Damodaran. (2016). Damodaran on Valuation : Security Analysis for Investment and Corporate Finance. Wiley.
• Corporate finance : theory and practice, Damodaran, A., 1997

Recommended Additional Bibliography

• Barker, R., & Milano, G. (2018). Building a Bridge between Marketing and Finance. Journal of Applied Corporate Finance, 30(2), 29–39. https://doi.org/10.1111/jacf.12297
• Chacko, G., & Evans, C. L. (2014). Valuation : Methods and Models in Applied Corporate Finance. FT Press.