CEO's
Series
Financial
Modeling using basic Excel
Corporate
Financial Models
Delivered
by
“the master of financial modeling”
TERMINOLOGY
Corporate
finance is the area of
finance
dealing with monetary decisions that business
enterprises make and the tools and analysis used to make these
decisions. The primary goal of corporate finance is to maximize
shareholder value.[1]
Although it is in principle different from managerial finance which studies the financial
decisions of all firms, rather than corporations alone, the main concepts in
the study of corporate finance are applicable to the financial problems of all
kinds of firms.
The discipline
can be divided into long-term and short-term decisions and techniques. Capital investment decisions are long-term
choices about which projects receive investment, whether to finance that
investment with equity or debt, and when or whether
to pay dividends
to shareholders.
On the other hand, short term decisions deal with the short-term balance of current
assets and current liabilities; the focus here is on
managing cash, inventories, and short-term borrowing and lending (such as the
terms on credit extended to customers).
The terms
corporate finance and corporate financier are also associated with investment banking. The typical role of an investment
bank is to evaluate the company's financial needs and raise the
appropriate type of capital that best fits those needs. Thus, the terms
“corporate finance” and “corporate financier” may be associated with
transactions in which capital is raised in order to create, develop, grow or
acquire businesses.
Financial modeling is the task of building an abstract
representation (a model) of a financial
decision
making situation.[1]
This is a mathematical model designed to represent (a
simplified version of) the performance of a financial asset or portfolio of a
business, project,
or any other investment. Financial modeling is a general term that means
different things to different users; the reference usually relates either to
accounting and corporate finance applications, or to quantitative finance applications. While
there has been some debate in the industry as to the nature of financial
modeling - whether it is a tradecraft, such as welding, or a science
- the task of financial modeling has been gaining acceptance and rigor over the
years.[2]
Typically, financial modeling is understood to mean an exercise in either asset
pricing or corporate finance, of a quantitative nature. In other words,
financial modeling is about translating a set of hypotheses about the behavior
of markets or agents into numerical predictions (Ref: Wiki)
Financial
modeling is creating a complete program/
structure, which helps you in coming to a decision regarding investment in a
project/ company. Now this could be on a simple piece of paper or in excel. The
advantage with excel is that, even if you have calculation speed and accuracy
like me then also you would be able to come to the right conclusion.
Financial
Modeling Excel Series is tolls when explore and
exam any financial opportunity the ability to perform accurate and realistic
financial analysis is imperative. In today's ever-changing business environment
the capability to write simple spreadsheets is not enough. You have to be able
to apply financial theory and produce accurate tools for analysis. A well
structured financial model can improve the reliability and quality of
decision-making. Designed for professionals involved in financial and credit
analysis who would like to effectively utilize the powerful features of Excel,
this course will explore the use of Excel as an advanced analysis tool, as well
as selected features that help prepare accurate reports and work papers.
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