FNCE 3415 Valuation and Financial Modeling

Lecture Videos

Basic Excel Modeling

1.Best Practices: Color Coding 2.Best Practices: Decimals 3.Best Practices: Shortcuts and Formatting 4.TVM Review: Overview 5.TVM Review: Annuities and Perpetuities 6.TVM Review: Excel, NPV, and IRR 7.Excel Functions: Statistical 8.Excel Functions: Logical and Dates 9.Excel Functions: Lookup 10.Excel Function: Custom Formats and Wrap-up

Financial Statements and Reporting

1.Accounting Fundamentals 2.Financial Reporting 3.Income Statement Overview 4.Revenue and Operating Expenses 5.Other I/S Items 6.Balance Sheet Overview 7.Assets 8.Liabilities and Equity 9.Cash Flow Statement

Financial Statements Analysis

1.Intro and Motivation 2.Common Size Analysis 3.Common Size Example 4.Ratio Analysis Intro 5.Ratio Analysis Details 6.Dupont Identity 7. Benchmarking and Issues 8. Overview of Ratio Sheet

Financial Statement Modeling

1.Introduction 2.Unlevered Cash Flows 3.Forecasting and Growth 4.Investments, Taxes, and Wrap-up.

Discounted Cash Flow Part 1

1.Introduction and Terminal Value 2.Terminal Value Continued 3.Cost of Capital Introduction 4.WACC Equation 5.Estimating Weights and Cost of Debt 6.Cost of Equity: CAPM 7.Risk Free Rate 8.Beta 9.Equity Risk Premium and Wrap-up

Discounted Cash Flow Part 2

1.Diluted Shares Overview 2.Dealing with Options 3.Diluted Shares Example 4.Loose ends: Mid-year Discounting and Cash 5.Loose ends: Cross Holdings 6.Loose ends: MV of debt and Dual Class Shares 7.Levered Cash Flows 8.Sensitivity Analysis 9.Final Thoughts on Intrinsic Valuation

Relative Valuation

1.Introduction to Relative Valuation 2.What is a Multiple? 3.RV Steps: Selecting Comparables 4.RV Steps: Selecting Multiples (P/E) 5.RV Steps: Selecting Multiples (Others) 6.RV Steps: Time Frame and Statistics 7.RV Steps: Apply the Multiples 8.Transaction Comps and Excess Cash

Model Selection and Football Field Chart

1.Overview 2.Intrinsic Valuation Overview 3.Relative Valuation Overview 4.Price, Value, and the Gap 5.Football Field Chart

Advanced Excel Skills

Please see Excel Video #32

Video #1: Best Practices: Color Coding

This video discusses the best practices for modeling: specifically universal color coding standards. Please watch and complete formating exercise before moving on past the basic Excel videos.

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Video #2: Best Practices: Decimals

This video discusses the best practices for modeling: specifically proper decimals and a few general guidelines. Please watch and complete formating exercise before moving on past the basic Excel videos.

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Video #3: Best Practices: Shortcuts and Formatting

This video discusses the best practices for modeling: specifically using shortcuts. Please watch and complete formating exercise before moving on past the basic Excel videos.

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Video #4: TVM Review: Overview

This video reviews the key concepts of time value of money.

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Video #5: TVM Review: Annuities and Perpetuities

This video reviews annuities and perpetuities.

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Video #6: TVM Review: Excel, NPV, and IRR.

This video discusses how to perform TVM calculations using Excel and reviews NPV and IRR.

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Video #7: Excel Functions: Statistical

This video reviews statistical functions in Excel.

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Video #8: Excel Functions: Logical and Dates

This video reviews logical and date functions in Excel.

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Video #9: Excel Functions: Lookup

This video reviews lookup functions in Excel.

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Video #10: Excel Functions: Custom Format and Wrap-up

This video reviews custom formatting in Excel and provides a quick wrap up of topics covered in the Basic Excel module.

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Video #1: Accounting Fundamentals

This video introduces accounting concepts, specifically we discuss key assumptions and principles of accounting.

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Video #2: Financial Reporting

This video finishes the discussion of accounting by looking at key constraints. We then discuss financial reporting, why do we require reporting and what type of reporting is required.

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Video #3: Income Statement Overview

This video introduces the income statement. We review the overall concept and look at both a simplified fictional example as well as examples for real companies.

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Video #4: Revenue and Operating Expenses

This video goes into detail on the main line items found on an income statement. Specifically we discuss revenue and operating expenses, i.e. all items above EBIT.

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Video #5: Other I/S

This video continues to discuss the income statement items below EBIT. We also discuss shares outstanding, EPS, and EBIT vs EBITDA.

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Video #6: Balance Sheet Overview

This video introduces the balance sheet. We review the overall concept and look at both a simplified fictional example as well as examples for real companies. We briefly discuss the concept of debits and credits.

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Video #7: Assets

This video goes over the accounts on the left-hand side of the balance sheet, i.e. Assets.

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Video #8: Liabilities and Equities

This video goes over the accounts on the right-hand side of the balance sheet, i.e. Liabilities and Equities.

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Video #9: Cash Flow Statement

This video discusses the cash flow statement.

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Video #1: Intro and Motivation

This video introduces and motivates our learning of financial statement analysis. We discuss generally what is financial statement analysis, how do we do it, and more importantly why do we do it.

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Video #2: Common Size Analysis

This video introduces common size financial statement analysis. We discuss both vertical and horizontal analysis of the balance sheet and income statement, perform a basic example, discuss interpreting results, and lastly some caveats.

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Video #3: Common Size Example

This video calculates common size financial statements for Stitch Fix.

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Video #4: Ratio Analysis Intro

This video introduces the concept of ratio analysis.

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Video #5: Ratio Analysis Details

This video goes through the four main types (groups) of ratios: Liquidity, Asset management, Leverage, Performance.

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Video #6: Dupont Identity and Benchmarking

This video covers the breakdown of ROE using the Dupont identity as well as the concept of benchmarking using a time-trend or peer groups.

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Video #7: Real Example and Issues

This video goes over common issues/concerns when performing ratios analysis. We also look at ratios for Stitch Fix and four industry peers. We conclude with n overview of the entire module.

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Video #8: Overview of Ratio Sheet

This video goes over the pdf formula sheet we discuss how each ratio is calculated, what it measures, and how to interpret.

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Video #1: Introduction

This video the first step on intrinsic valuation, financial statement modeling. We introduce the general intuition and logic behind DCF valuation and first piece of the puzzle required: Cash flows.

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Video #2: Unlevered Cash Flows

This video introduces the concept of unlevered cash flows or free cash flow to the firm (FCFF), including how to calculate FCFF and a basic example.

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Video #3: Forecasting and Growth

This video introduces the concept forecasting using a top-down sales approach. We discuss the primary drivers of growth as well as a general strategy to forecast growth and expenses. We also discuss choosing a forecast window.

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Video #4: Investments, Taxes, and Wrap-up.

This last video covers forecasting investments, choosing the appropriate tax rate, and ensuring our model is internally consistent. Lastly, we introduce the concept of proforma financial statements.

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Video #1: Introduction and Terminal Value

This video introduces the three concepts from this module: terminal value, cost of capital, and enterprise value. We discuss the infinite horizon problem as well as the perpetuity growth approach to solving the problem, including performing a simple example of the calculation.

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Video #2: Terminal Value Continued

In this video we continue our discuss of the terminal value. We begin by discussing how to best estimate the growth rate and sources for obtaining useful information. We also discuss and perform a simple example of calculating the terminal value using the exit multiple approach. The last two topics are bringing the terminal value back to the present and the pros/cons of each approach to calculating the terminal value.

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Video #3: Cost of Capital Introduction

In this video we introduce the concept of a discount rate and discuss the appropriate discount rate for unlevered cash flows: the Weighted Average Cost of Capital (WACC). We also discuss the key components: the cost of equity, the cost of debt, and the capital structure weights.

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Video #4: WACC Equation

In this video we discuss the role of taxes in the cost of equity and cost of debt and put all the pieces together into a WACC equation.

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Video #5: Estimating Weights and Cost of Debt

In this video we discuss how to estimate the capital structure weights as well as both the yield and default spread approaches to estimating cost of debt.

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Video #6: Cost of Equity: CAPM

In this video we introduce the concept of cost of equity (required/expected return) and discuss in detail the capital asset pricing model (CAPM).

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Video #7: Risk Free Rate

In this video we discuss the risk free rate, both the general concept as well as the best proxy. We also ask whether it is appropriate to normalize the risk free rate.

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Video #8: Beta

In this video we discuss the concept of beta, the regression approach to estimation, issues with this approach, the types of risk beta is measuring, the relationship between equity beta, leverage and asset beta, and lastly the bottom up approach to estimating beta.

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Video #9: Equity Risk Premium and Wrap-up

In this video we discuss the equity risk premium, the enterprise value, and wrap-up the module.

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Video #1: Diluted Shares Overview

This video discusses the concept of diluted shares and the primary dilutive equities: Restricted Stock Units and Options.

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Video #2: Dealing with Options

This video discusses three different approaches to dealing with options. We also discuss options outstanding vs exercisable.

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Video #3: Diluted Shares Example

This video goes through a basic example of accounting for equity compensation when calculating equity value per share. Specifically, we calculate the diluted shares outstanding accounting for both restricted stock unit and option compensation.

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Video #4: Loose Ends: Mid-year Discounting and Cash

This video is the first of three working through a few loose ends in valuation. We discuss the concept and implementation of mid-year discounting as well as how we deal with cash and whether or not to apply a premium/discount to cash.

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Video #5: Loose Ends: Cross Holdings

This video is the second of three working through a few loose ends in valuation. We discuss the concept of cross holdings, the ideal solution to accounting for cross holdings, and lastly a more realistic approach.

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Video #6: Loose Ends: MV of Debt and Dual Class Shares

This video is the last of three working through a few loose ends in valuation. We discuss an approach to estimating the market value of debt and how to account for dual class stock in your valuation.

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Video #7: Levered Cash Flows

This video discusses levered cash flows.

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Video #8: Sensitivity Analysis

This video discusses the concept and tools for performing sensitivity analysis on our valuation.

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Video #9: Final Thoughts on Intrinsic Valuation

This video discusses what makes a good valuation and big picture how to perform a good intrinsic valuation.

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Video #1: Introduction to Relative valuation

This video introduces the concept of relative valuation, discusses the idea of pricing vs valuing, and considers why we perform relative valuation.

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Video #2: What is a Multiple?

This video discusses the general construct of a multiple as well how to define, describe, and apply a multiple. Lastly, we discuss the market assumption of relative valuation.

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Video #3: RV Steps: Selecting Comparables

This video briefly discusses how to select comparable companies and the sampling trade.

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Video #4: RV Steps: Selecting Multiples (P/E)

This video discusses the P/E multiple including a detailed analysis of the key value drivers.

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Video #5: RV Steps: Selecting Multiples (Others)

This video discusses the PEG, Price-to-book, EV/EBIT(DA), and EV/Sales multiples.

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Video #6: RV Steps: Time Frame and Statistics

This video discusses period of measurement, trailing or latest twelve month (TTM or LTM) and forward looking. We also discuss selecting a statistic from the distribution.

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Video #7: RV Steps: Apply the Multiple

This video goes through a basic example of applying the multiples (equity and enterprise) for a fictitious company.

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Video #8: Transaction Comps and Excess Cash

This video introduces transaction comparables and goes through a fictitious example. We also discuss an approach to estimating excess cash.

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Video #1: Overview

This video discusses the topics for this module as well as revisiting the concept of valuation as a craft.

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Video #2: Intrinsic Valuation

This video briefly reviews the intrinsic valuation approach including a discussion of the inherent market assumption, myths/truths, pros/cons, value drivers and when the approach may be more appropriate to use.

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Video #3: Relative Valuation

This video briefly reviews the relative valuation approach including a discussion of the inherent market assumption, pros/cons, value drivers and when the approach may be more appropriate to use.

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Video #4: Price, Value, and the Gap

This video discusses the gap between price and value and the approaches one can take to evaluating this gap. Lastly, we ask "Now what?" as it pertains to selecting one approach or the other.

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Video #5: Football Field Chart

This video introduces and discusses the football field chart as well as investment recommendations. Please see Excel Video #30 and Excel Video #31 for examples of building a football field chart.

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