Financial Analysis and Valuation

Creating value is the central task for any executive. To generate value, managers need to be able to assess the financial impact of their decisions, which in turn requires an understanding of financial analysis techniques and valuation methods. Similarly, investors, creditors, and other stakeholders use such skills in evaluating the implications of decisions made by managers. Financial Analysis and Valuation will help you evaluate the financial consequences of business decisions and how to value companies, businesses, and investments.

Please note that this program requires a basic understanding of the following:

• Financial statements, including the balance sheet, income statement, and cash flow statement
• How accrual accounting differs from cash accounting, including revenue and expense recognition and the basic principles of asset and liability recognition and measurement
• Time value of money and present value calculations

These concepts, above, are covered in Columbia Business School Executive Education program Finance and Accounting for the Non-financial Executive.

For a complete program schedule download the agenda.

Financial analysis and — especially — financial valuation are often rightfully described as a form of art, but there is also a lot of science behind them. The Financial Analysis and Valuation program emphasizes these aspects of science and provides a structured framework for implementing each part of the analysis. A sound framework allows you to incorporate the “soft” aspects of the analysis (i.e., the “art”) in a more informative way.

By completing this program, you will gain an understanding of financial statement analysis, corporate finance, and valuation methods. You will learn how to estimate the value of equity and debt securities and how to evaluate the financial consequences of various business decisions and activities, including:

• Investments: mergers and acquisitions (M&A), capital expenditures, investments in intellectual capital, leasing, and more
• Strategies: product differentiation, economies of scale, cost leadership, outsourcing, economies of scope, diversification, and more
• Working capital management: just in time inventory, credit terms, factoring receivables, operating credit, and more
• Financing: level and type of borrowings, share repurchases, dividend policy, and more

For each of the above activities, we will discuss the impact on the financial statements and on key financial ratios, as well as implications for performance and risk assessment, forecasting and valuation. For example, how are M&A activities reflected in the financial statements? How do they affect key ratios such as profit margin and earnings per share? How do they affect expected cash flows, risk, and value?

Specifically, you will be able to:

• Understand the information provided by the financial statements and other disclosures as well as its limitations
• Reformulate and adjust the financial statements to facilitate an informative analysis
• Analyze the reformulated financial statements to evaluate the firm’s profitability, earnings quality, and growth prospects
• Develop cash flow forecasts and pro forma financial statements
• Evaluate investment and business risks and estimate the cost of capital
• Value companies, businesses, and investment projects
• Assess the value of mergers, acquisitions, and strategic alliances
• Analyze the impact of different business activities on the financial statements, key ratios and underlying dimensions, and value
• Conduct scenario and sensitivity analyses

For a first look at the program content, we invite you to watch this recent webinar with the program's faculty director Doron Nissim:

PLEASE NOTE: This program takes place in a live, virtual setting. See the agenda. You may also view the in-person program schedule for when our in-person programming resumes.

This program is comprised of class lectures in which concepts will be developed and explained, with an emphasis on implementation. Participants will receive excel workbooks containing valuation models and various financial analysis tools and use them to solve real-world exercises. The class notes, excel workbooks and, most importantly, knowledge acquired in the program will provide participants with the tool kit needed for conducting financial analysis and valuation.

During Financial Analysis and Valuation, participants will explore the following topics: