Discounted Cash Flow Modelling Explained

Overview:

This course will offer an insight into how DCF models are constructed & the pitfalls one encounters along the way. What matters is exactly where to look for the input values & understanding what you are seeing as the outputs.

The models are best employed to produce a range of reasonable outcomes rather than a pinpoint ‘shot in the dark’ out to the future. 

Why you should Attend:

Discounted Cash Flow modelling is probably the most heavily used tool in Corporate Finance & Equity Research teams worldwide. 

While powerful, they are subject to that old axiom ‘garbage in, garbage out’. Small changes in the inputs can result in large swings in the outputs - a prospective future value of a Company’s Equity. 

Nevertheless, with heightened investor concerns about the quality of declared Corporate Earnings numbers & the reliability of over-used valuation metrics like the P/E ratio, more Investors are turning to Cash Flow numbers. 

Areas Covered in the Session:

• Rationale for & characteristics of DCF modelling. 
• What is Free Cash Flow exactly?
• Deriving the Cost of Equity
• The Equity Risk Premium - the past as a guide for the future?
• Deriving the Cost of Debt
• Risk Free Rates - looking where exactly?
• Calculating the Weighted Average Cost of Capital
• Terminal Value derivation methods
• A look at sensitivity analysis in practice (Excel)

Who Will Benefit:

• Middle & Back Office Professionals from Exchanges
• Regulators
• Asset Managers
• FinTechs
• Fund Administrators
• Investment Banks
• Wealth Managers
• Custodians
• Clearing Houses