Course 7804: Financial Analysis and Corporate Valuation - Comprehensive Workshop (5 days) Course introduction. Topics

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1 Course 7804: Financial Analysis and Corporate Valuation - Comprehensive Workshop (5 days) Course introduction The Financial Analysis section of the course will help participants understand and analyze the key components of financial statements income statement / comprehensive income, balance sheet and statement of cash flows. It includes recognition and measurement of items in income statement / comprehensive income and balance sheet, review of disclosure notes and interpretation of financial statements using key ratios. The commonly used creative accounting techniques will be discussed to enable participants to evaluate the quality of financial reporting. The second part of the course will start with an introduction to Corporate Valuation and key principles of fair value measurement. The different approaches to valuation of debt instruments will be explained including the pros and cons of each approach. The course also covers different approaches to equity valuation and looks at issues in relation to unlisted equity, application of discounted cash flow method and estimation of cost of debt and equity. Some of the difficulties of valuing companies in the current global economic conditions will be addressed. The course examines current valuation guidance and reviews the role of the International Valuation Standards Council, the IVSC. The course is relevant to those performing valuations whatever the reason, such as tax, litigation, regulatory compliance, M&A and financial reporting. Topics Different accounting frameworks Why Different Frameworks Exist International Financial Reporting Standards (IFRS) Other GAAP (Generally Accepted Accounting Practices) Narrative Reporting What to Look For How to Interpret the Information Auditor s Role Printed from on 27 Jun 2018 Page 1 of 6

2 Income Statement / Comprehensive Income Analysis Accruals Concept Revenue Recognition Expense Recognition Presentation Key Performance Indicators including Earnings Per Share Understanding and Interpreting Related Disclosure Notes Balance Sheet Analysis Recognition and Measurement of Tangible Fixed Assets Intangible Assets Financial Investments Inventories Accounts Receivable Leases Taxes Financing Arrangements Provisions and Contingent Liabilities Presentation Understanding and Interpreting Related Disclosure Notes Interpretation of the Statement of Cash Flows Direct and Indirect Methods Operating Cash Flows Using the reconciliation of net profit to operating in order to identify non cash movements and judgements Investing Cash Flows Financing Cash Flows Estimating Net Debt Ratio Analysis Performance Liquidity Gearing Creative/Inappropriate Accounting Revenue Misstatement Printed from on 27 Jun 2018 Page 2 of 6

3 Expense Misstatement Over/Undervaluing Assets Not Recognizing Liabilities Off-Balance Sheet Financing Opportunities Presentation of One-off Gains and Losses Corporate valuations Reasons for performing valuations Tax, litigation and dispute resolution, financial reporting (IFRS), M&A, corporate recovery, Stock Exchange reporting - fairness opinions Bases of value - fair value, market value, value to the owner - terminology differences IFRS 13, Fair Value Measurement Cost, market and income approaches Meaning of fair value Market participants Principal and most advantageous market Link with International Valuation Standards Council, IVSC, guidance Valuation inputs and assumptions Valuation hierarchy and reliability assessment Valuation of Simple Debt Instruments Understanding the instrument being valued Market and income approaches Using discounted cash flow Benchmarking using credit ratings Assessment of IFRS 13 hierarchy levels Valuation of unlisted equity - overview Understanding the subject company Industry and economic review Performing research Controlling or non-controlling holding - valuation implications Equity and enterprise value What is meant by a liquidity discount? Discounted cash flow overview Cash flow forecast Printed from on 27 Jun 2018 Page 3 of 6

4 Discount rate Consistent treatment of interest and tax The Gordon Growth Model Projecting cash flows for a DCF exercise Putting together a cash flow forecast Working capital requirements Capital expenditure requirements Risk and growth assumptions Cost of capital Weighted average cost of capital Estimating cost of debt, Kd Estimating cost of equity, Ke Capital Asset Pricing Model, CAPM The equity risk premium Market approach to equity valuation - overview Equity and enterprise value EBIT, EBITDA multiples Choice of multiples Research Choice of comparables and peer group Cost approach to valuation Limited situations in which applied IVSC and other guidance Valuations of investment companies Break-up valuations Drawing conclusions More than one approach Implied multiples from DCF valuations Reverse engineering Consideration of IFRS 13 disclosures required Teaching method Printed from on 27 Jun 2018 Page 4 of 6

5 Group live instruction in a workshop format PowerPoint presentations with demonstrated examples Numerous examples for participants to work through on their laptops Participant questions and group discussions on real life case studies All participants receive a comprehensive binder containing presentation slides Electronic copies of exercise and case study solutions will be available to participants Prerequisites Basic understanding of financial statements Course benefits Apply the principles of recognition, measurement and presentation of income statement / comprehensive income and balance sheet items in IFRS Analyze and interpret financial statements using key ratios Learn the creative accounting techniques often used in financial statements and analyze its impact on quality of financial analysis Apply the different approaches to value debt instruments and evaluate the pros and cons of each approach Apply the key approaches to equity valuation and evaluate the issues in relation to unlisted equity, application of discounted cash flow method and estimation of cost of capital Who should attend? Finance department staff involved in the preparation of valuations for IFRS reporting purposes Regulators who analyse financial statements and valuations to ensure compliance Analysts who review valuations in IFRS or other accounts M&A teams involved in assessing acquisition or divestment opportunities Auditors and their valuation advisers involved in reviewing IFRS valuations Valuation consultants involved in valuing shares or investments in businesses for any purpose - tax, litigation, under the Articles of Association, matrimonial, M&A, financial reporting under IFRS or other GAAP Printed from on 27 Jun 2018 Page 5 of 6

6 CPE / CPD Accreditation NASBA IASeminars is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of accountancy have final authority on the acceptance of individual courses for CPE credit. Complaints regarding registered sponsors may be submitted to the National Registry of CPE Sponsors through its website: Field of study: Accounting ICAEW Partner in Learning IASeminars is proud to have been named as an ICAEW Partner in Learning, working together to offer the ICAEW IFRS Certificate to our clients worldwide. ICAEW (The Institute of Chartered Accountants in England and Wales) is a world leading professional membership organisation that promotes, develops and supports over 145,000 chartered accountants worldwide. CPE certificates obtained from attending IASeminars courses are an ideal way for ICAEW members and others to demonstrate their continuing professional development, provided that the topic is relevant to their learning and development needs. Texas State Board of Public Accountancy IASeminars is registered with the Texas State Board of Public Accountancy as a CPE sponsor. Our CPE Sponsor ID is: This registration does not constitute an endorsement by the Board as to the quality of our CPE Program. In House To bring this course in-house please contact us and we will be pleased to assist Printed from on 27 Jun 2018 Page 6 of 6