Kanenus College
Department of Accounting and Finance
Course Information
Course code AcFn 3044
Course Title Financial Modeling
Degree BA Degree in Accounting and Finance
Program
Module Finance
Module Code AcFn-M3040
Lecturer Tefera B. (MSc)
ETCTS Credits 3
Contact Hours 2
(per week)
Course After successfully completing this course, the students should be able to:
Objectives/C Explain financial modeling; valuation techniques and basic financial
ompetences to calculations using spread sheet like excel.
be Acquired Perform corporate valuation be applying various methods to determine
business value
Model pro forma financial statements and determine business value;
Course The course is designed to enable students understand financial models and
Description develop valuation financial model to ascertain the values of assets and
business.
WEEKS Course Contents Readin
g
4WEEKs 1. Introduction to Financial Modeling and Valuation
{1ST – 4th} 1.1 Introduction to financial modeling
1.2. Overview of excel functions for modeling
1.3. Basic Financial Calculations using excel
1.4. Present value and Net Present Value
1.5. The IRR and Loan Tables
1.6. Future values and Applications
7.7. Introduction to valuation and valuation standards
3WEEKs 2. Corporate Valuation
{5th - 7 TH} 2.1. Methods to Compute Enterprise Value (EV)
2.2. Using Accounting Book Values to Value a Company: The
Firm’s Accounting Enterprise Value
2.3. Efficient Markets Approach to Corporate Valuation
2.4. Enterprise Value (EV) as the Present Value of the Free Cash
Flows: DCF “Top Down” Valuation
2.5. Free Cash Flows Based on Consolidated Statement of Cash
Flows (CSCF)
4WEEKs 3. Determining the value of the firm
{8 TH - 11TH} 3.1. Computing the Value of the Firm’s Equity, E
3.2. Computing the Value of the Firm’s Debt, D
3.3. Computing the Firm’s Tax Rate, TC
3.4. Computing the Firm’s Cost of Debt, rD
3.5. Two Approaches to Computing the Firm’s Cost of Equity, rE
3.6. Implementing the Gordon Model for rE
3.7. The CAPM: Computing the Beta, β
3.8. Using the Security Market Line (SML) to Calculate Merck’s
Cost of Equity, rE
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3.9. Three Approaches to Computing the Expected Return on the
Market, E(rM)
4WEEKs 4. Pro-Forma Financial Statement Modeling
{12TH - 4.1. How Financial Models Work: Theory and an Initial Example
14TH} 4.2. Free Cash Flow (FCF): Measuring the Cash Produced by the
Business
4.3. Using the Free Cash Flow (FCF) to Value the Firm and Its
Equity
4.4. Some Notes on the Valuation Procedure
5.5. Alternative Modeling of Fixed Assets
6.6. Sensitivity Analysis
Teaching & The teaching and learning methodology include lecturing, discussions,
Learning problem solving, and analysis. Take-home assignment will be given at the
Methods/strat end of each chapter for submission within a week. Solution to the
egy assignments will be given once assignments are collected. Cases with local
relevance will also be given for each chapter for group of students to present
in a class room. The full and active participation of students is highly
encouraged.
Assessment The evaluation scheme will be as follows:
/Evaluation Test Test Assignment 1 Final Total
1 2
15% 15% 30% 40% 100%
Roles of the He/she will come to the class regularly on time and deliver the lecture
Instructor in a well-organized manner. Besides, at the end of each class he/she
gives reading assignment for the next class. He/she will make sure
that proper assessments are given. He/she is also responsible to give
feedback for each assessment.
Roles of the The success of this course depends on the students‟ individual and collective
students contribution to the class discussions. Students are expected to participate
voluntarily, or will be called upon, to contribute to set exercises and
problems. Students are also expected to read the assigned readings and
prepare the cases before each class so that they could contribute effectively
to class discussions. Students must attempt assignments by their own.
Proficiency in this course comes from individual knowledge and
understanding. Copying the works of others is considered as serious offence
and leads to disciplinary actions.
Text and Text Book:
reference Simon Benninga, Financial Modeling, 4th ed., 2014, MIT Press
books Reference Books
Tom Y. Sayer, Financial Modeling for Business owners and Entrepreneurs,
Developing Excel Models to Raise Capital, Increase Cash Flows, Improve
Operations Plan Project and Make decisions., Apress
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