Business Valuation
This curriculum teaches the fundamentals of valuing public and private companies through a case study approach. It covers the different methodologies and focuses on the Discounted Cash Flow (DCF) method as participants build a DCF analysis for an actual acquisition, using each component of the DCF model: projected free cash flows, Weighted Average Cost of Capital (WACC) and terminal value. The program concludes with an introduction to sensitivity and scenario analysis, which is used to improve the base case valuation.
This curriculum is made up of the following modules:
- Introduction to Business Valuation
- The Foundations of Free Cash Flows
- The Weighted Average Cost of Capital
- Terminal Value
- The DCF Approach to Business Valuation
- The Limitations of the DCF Approach
| Program Level | Basic |
| Prerequisites | This course has no prerequisites. |
| Advance Preparation | No advance preparation required. |
| Recent Revision Date | December 22, 2014 |
| Instructional Delivery Method | QAS Self Study |
| Field of Study | Accounting |
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Duration : 1 hour
- Why determine a business valuation?
- The role of the public markets in business valuation
- Common valuation methodologies
- Why discounted cash flow is the best approach
- Introducing Kellogg's as our case study
Duration : 1 hour
- Cash flow vs. free cash flow
- Determining free cash flow
- Reconciling free cash flow with the consolidated statement of cash flow
- Value Drivers
- Projecting Kellogg's free cash flows for the projection period based on the value drivers
Duration : 1 hour
- Introducing the weighted average cost equation
- Calculating the after-tax expected cost of debt
- Using CAPM to calculate the expected cost of equity
- Calculating the weighted average cost for Kellogg's before and after the Keebler acquisition
- The effect of leverage on weighted average cost
Duration : 1 hour
- Defining terminal value and its impact on the DCF valuation
- Methods for determining terminal value
- Determining the most appropriate terminal value for Kellogg's
Duration : 1 hour
- Measuring shareholder value creation
- Discounting to find the value of operations
- Determining the total entity or market value
- Determining the total value of equity and per-share value of equity
- Valuing Kellogg's using the DCF approach
Duration : 1 hour
- Sensitivity of DCF valuations to the assumptions made
- Using sensitivity analysis to improve the base case valuation
- Scenario analysis and Monte Carlo simulations