CEO's Series

CEO's Series

Financial Modeling using basic Excel

Corporate Financial Models

Delivered by

muslim@myconsulting.co.id

“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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