The time value of money is the most fundamental concept in finance. It is the cornerstone of understanding asset valuation at all levels – from Fixed Income and Equities to Derivatives and Real Estate.  It also provides the basis for understanding investment performance.  It is far too easy to rely on models and calculators to do all the work for us, so in this e-learning course we explain the concept from first principal – why is there a time value of money? - as well as going on to look at some simple Excel calculations and functions.  There are simple excel models to accompany the  course.

The course is aimed at analysts with little accounting knowledge, or as a refresher of key concepts. It aims to teach delegates how to analyse and interpret company accounts, not how to be an accountant! Beginning with the primary accounting overview the course explains what the accounts ‘ headings’ mean in commercial and practical terms and how the balance sheet, income statement and cash flow are linked together in the “accounting flow”. 

Downloadable exercises, with full video de-briefs, will allow delegates to understand how the operations of the business and the cash cycle in a business drive the “shape” of the accounts and the company’s ability to generate cash (or not!).

Delegates will learn how to calculate and interpret key operating and performance metrics used in valuation and credit assessment. The course will also show delegates the most common accounting adjustments made to these metrics to make them comparable across companies with interesting corporate structures, for example involving pension deficits and leasing for example. This course is equally relevant to people in management and accounting in a corporate context and analysts, investors and managers in banks and financial institutions.

This programme will teach you step-by-step how to build a leveraged buyout model. This is exactly the kind of model you might use as an investment banking analyst to “trawl” for deal opportunities and prepare a pitchbook. The crucial word here is Leveraged and a key element of the programme is to introduce you to the typical debt instruments used, the different roles they play in leveraged financing schemes and how the market has changed. The bottom line here is that the leveraged financing market in Europe grows more and more like the US market in terms of the depth of liquidity available, the range of investors, and the aggressiveness of financing terms. We’ll give you some background into the development of the market and how the arrival of new investors, such as Hedge Funds and CLOs pre-crunch, and more recently insurance companies and other institutions to the B loan market, have changed the funding landscape.

The model we’ll build is highly flexible, so it will allow you to model “old-school” A,B loan and mezzanine structures, unitranche financings and mixed loan and high yield bond schemes.

The model will produce all of the main return metrics that P/E investors use and the standard credit risk metrics that potential debt investors will use. We will also produce a value bridge – disaggregating returns into their various drivers: sales growth, operating margin expansion, debt paydown, “multiple arbitrage” and fees.

Simple models like this one are excellent tools to give you insight into what drives the economics (or lack of!) in a deal. This is precisely the sort of model you might build as part of your investment banking induction programme (or indeed you might discover it’s the “standard model” in your department – albeit with a few formatting changes). We hope you enjoy the programme.