Investment banking analyst: applied workshop

Financial statement links

Connect operations to income, balance sheet and cash.

Draw the difference between revenue recognition and cash collection.

Teaching example: A credit sale of 100 increases revenue and receivables before cash is collected.. Predict the result, independently check the key step, and compare these assumptions with the actual role. Do not use demonstration results as real-world advice.

Business drivers

Understand revenue and cost drivers before forecasting.

List price, volume, margin and working-capital drivers for a fictional retailer.

Teaching example: Sales = store count × traffic per store × conversion × basket size.. Predict the result, independently check the key step, and compare these assumptions with the actual role. Do not use demonstration results as real-world advice.

Forecast assumptions

Make forecasts adjustable and auditable.

Build three-year revenue/cost forecasts with base and downside cases.

Teaching example: Revenue 100 growing by 10% becomes 110; keep growth and margin inputs separate.. Predict the result, independently check the key step, and compare these assumptions with the actual role. Do not use demonstration results as real-world advice.

Discounted cash flow

Match cash-flow definitions and discount rates.

Discount two periods of cash flow and state terminal assumptions separately.

Teaching example: 110 received in one year at 10% has a present value of 100.. Predict the result, independently check the key step, and compare these assumptions with the actual role. Do not use demonstration results as real-world advice.

Trading comparables

Match numerator, denominator and entity scope.

Compare three fictional EV/EBITDA multiples and explain differences.

Teaching example: EV 600 divided by EBITDA 100 gives 6x; this is not a price/earnings multiple.. Predict the result, independently check the key step, and compare these assumptions with the actual role. Do not use demonstration results as real-world advice.

Transactions and financing

Separate rationale, financing and transaction risks.

Write a one-page acquisition rationale, funding plan and diligence questions.

Teaching example: Synergies need evidence; a management target is not a realised benefit.. Predict the result, independently check the key step, and compare these assumptions with the actual role. Do not use demonstration results as real-world advice.

Technical explanation and model review

Explain calculations rather than memorising conclusions.

Explain how a higher discount rate affects present value and review signs.

Teaching example: For fixed positive cash flows, a higher discount rate lowers present value.. Predict the result, independently check the key step, and compare these assumptions with the actual role. Do not use demonstration results as real-world advice.

Worked example · fictional

From a problem to inspectable work

Synthetic deal: FCFF is 110 and 121 in years 1 and 2, terminal value is 1210 at year 2, WACC 10%, net debt 200. Year-end flows, millions.

1. EV = 110/1.1 + (121+1210)/1.1² = 1200; equity = 1200−200 = 1000. Discount terminal value; FCFF values the enterprise.
2. Further judgment: Terminal value dominates EV. How should the result be reviewed?
3. Check terminal assumptions, WACC/growth sensitivity and precision claims

Deliver company and valuation memo: the calculation reference is 1000; the recommendation must respect Check terminal assumptions, WACC/growth sensitivity and precision claims. Separate numbers, inference and unknowns.

Failure case and repair

In Discounted cash flow, copy tool output without definitions, then retain the conclusion when asked: Terminal value dominates EV. How should the result be reviewed?

Even a result of 1000 does not explain when Check terminal assumptions, WACC/growth sensitivity and precision claims is supported.

EV = 110/1.1 + (121+1210)/1.1² = 1200; equity = 1200−200 = 1000. Discount terminal value; FCFF values the enterprise. Then test assumptions in Transactions and financing.