2025/2026
Financial Modeling and Investment Valuation
Type:
Mago-Lego
Delivered by:
International College of Economics and Finance
When:
3 module
Open to:
students of one campus
Language:
English
ECTS credits:
4
Contact hours:
32
Course Syllabus
Abstract
Financial Modeling and Investment Valuation is a one-semester elective course designed for the first- or second-year students of the ICEF Master of Science program in Financial Economics. The course is taught in English. The course provides an overview and analysis of key valuation methods. The course is expected to help students to develop financial modeling skills in MS Excel and practice investment valuation. The course explores the best practices of financial modeling according to the existent modeling guidelines. Students will learn how to build a financial model, how to create a correct system of financial statements and forecast the changes in firm’s future cash flows under different scenarios. Using practical cases, students will find out how to build financial models that are flexible, appropriate, structured and transparent and will learn how to conduct DCF and LBO valuation analysis and interpret valuation outputs to provide investment recommendation.
PREREQUISITES:
To be eligible for the course, students must have
1. Familiarity with accounting and financial statements, including:
- Income Statement;
- Balance Sheet;
- Cash Flow Statement;
(CFA Level I book on Financial Statement Analysis is highly recommended).
2. Strong understanding of Corporate Finance and Valuation principles, including:
- IRR (Internal Rate of Return);
- NPV (Net Present Value);
- FCFF (Free Cash Flow to the Firm);
- Enterprise Value;
(CFA Level I book on Equity Investments Valuation is highly recommended).
It is recommended to use MS Excel (English version) and MS Windows (preferred, but Mac OS acceptable).
Learning Objectives
- Teach how to build financial models applying methods for asset valuation
- Explain pros and cons of each valuation method
- Apply valuation methods in practice and provide investment recommendation
Expected Learning Outcomes
- Be able to choose the valuation method.
- Be able to calculate FCFE and FCFF.
- Be able to interpret the multiples.
- Be able to test the correspondence of a financial model to the financial modelling standards.
- Be able to choose the inputs of a financial model.
- Be able to develop the forecast part of the financial model.
- Be able to audit a financial model and correct errors
- Be able to derive Enterprise Value and Equity Value and interpret the valuation outputs
Course Contents
- Financial modeling basics. Linking financial statements.
- Financial statements projections. Free Cash Flow calculation. Discounted Cash Flow method.
- Valuation methods. Enterprise Value to Equity Value bridge. Sensitivity analysis.
- Comparable valuation basics. Multiples method. Valuation football field
- LBO modeling. Investment returns analysis.
- Company valuation case.
- Valuation analysis and scenarios. Audit of the model. Investment recommendation.
- Q&A session and Final Exam preparation.
Assessment Elements
- Valuation case (group project)
- Valuation negotiations (group case)
- In-class assignments (individual assignments)
- Home assignments 1 and 2: Online Excel model solving
- Final exam
Interim Assessment
- 2025/2026 3rd module0.4 * Final exam + 0.1 * Home assignments 1 and 2: Online Excel model solving + 0.2 * In-class assignments (individual assignments) + 0.2 * Valuation case (group project) + 0.1 * Valuation negotiations (group case)
Bibliography
Recommended Core Bibliography
- Financial modeling : with a section on Visual Basic for Applications, Benninga, S., 2000
- Investment valuation : tools and techniques for determining the value of any asset, Damodaran, A., 2012
Recommended Additional Bibliography
- Ian Beaman, Erwin Waldmann, & Peter Krueger. (2005). The impact of training in financial modelling principles on the incidence of spreadsheet errors. Accounting Education, (2), 199. https://doi.org/10.1080/0963928042000229699