Business Valuation is one of the most challenging tasks to perform in relation to the analysis of the company financials. The standard valuation relies on a good mix of science and art, in that it involves careful measures of critical input variables, mixed with a large part of interpretation and intuition. Company valuation relies on the appropriate estimation of key parameters, like growth potential, right cash flow discounting, cost of equity and cost of debt, WACC etc. We provide robust background to assess what the theoretical value of a company should be based on the available information, the balance sheet, profit and loss account and cash flow statement. A good financial manager is supposed to understand the value of the company he manages, thus proper knowledge of the methodologies for corporate valuation is at the basis of a complete education in corporate finance. After this course, a Student will know what are the different valuation methodologies available for corporate valuation, and how do they differ from each other? How can the cost of equity be estimated with the use of the CAPM model in practice? How can market return and beta estimation (the parameters of CAPM) be estimated? We present the different valuation methodologies available to the analyst.

The course prepares students for the rewards and challenges they face in the professional world of business valuation, IPOs, tests for impairment of the assets. This course emphasizes both the development of analytical skills such as Excel to leverage available information technology and the values and behaviours that make analysts effective in the workplace.

The course describes the following topics:

1. Valuation of enterprises: theoretical basis

2. Capital Assets Pricing Model CAPM, the risk-free rate, the risk premium, the beta

3. Valuation of Cash Flow Streams, Income methods of enterprise valuation, the cost of capital, beta estimation, growth and terminal value

4. Financial Statement and Ratio analysis

5. Working Capital Management, Conversion Cycles, Receivables and Payables, Inventory, Cash and Liquidity Management

6. Pro Forma Statements, Forecasting, flexible budgeting

7. Weighted average cost of capital WACC, selection of the beta coefficient based on the CAPM model

8. Discounted Free Cash Flow Models

9. Relative Valuation Models

10. The Modigliani-Miller Theorems, the irrelevance of capital structure, WACC, Tax-Based Theories of Capital Structure

11. Dividend Discount Models, Payout Policy – Dividends vs. Share Repurchase, Modigliani-Miller Revisited

12. Real Options approach to business valuation, binomial trees, Black-Scholes-Merton Model

13. Presentations of case study’s business valuations, incl. ICT industry (Asseco), gaming industry (CD Project),

14. Foreign companies valuations – case-study of Facebook, Alibaba, Microsoft, Coca Cola, Astra Zeneca

15. Students’ Presentations of Business Valuations