Syllabus & Learning Outcomes
How do different types of investors think about an investment opportunity? What kind of securities and contracts do they offer? How should a company decide what is a "good deal"? This course introduces you to the challenges and pitfalls of financing enterprises. You will learn the basic tools for evaluating companies, including using discounted cash flow analysis in Excel and understanding how to apply this model to your entrepreneurial venture. You will then learn how valuation works with different types of securities investors use to finance their enterprises.
Course type: elective
Hours in total: 26 (Lectures and seminars) 2 hours x 13 weeks or equivalent.
Number of credits (ECTS equivalents): 3
Assessment and completion of the course: Graded credit test
Continuous assessment
The student will write six quizzes (each for 10 points) for the max during the semester. 60 percentage points.
Final assessment
Student passes the final assessment and examination when they meet the requirement to obtain at least 51% out of 100%.
At the end of the semester, the student passes the written final examination by 40 percentage points. In addition, the course enables students to gain an extended view and acquire the skills and procedures of an expert and analyst who prepares a report on determining the company's value.
Overall assessment: Overall assessment is the sum of the assessments obtained by students in the assessment period. The internal regulations of the Technical University of Košice overall result is determined by the internal regulations of the Technical University in Košice. (Study Regulations, the internal regulation principles of doctoral studies)
Learning outcomes
The course enables students to obtain a theoretically-based and practical overview of financial analysis and valuation. The subject presents various methods of estimating ta company's"fair" value Students learn to distinguish methods and apply them correctly and critically. To this end, theoretical concepts will be critically assessed, and the advantages and disadvantages of each method will be highlighted. In addition, students will learn how to determine the appropriate discount rate using an adequate method.
Upon successful completion of the course, the student:
(i) acquire theoretical knowledge in the field of company valuation and get acquainted with the basic principles of quantitative and qualitative valuation of the company. He will be able to choose a suitable approach to valuation from a list of (quantitative) methods and explain which methods are preferred in practice.
(ii) deepen their skills in applying different valuation methods and critically assess the advantages and disadvantages of different methods. Can specify situations that require a company's valuation and choose from different approaches to determine the discount factor and select the appropriate method for the application.
(iii) By completing the course, the student will deepen his decision-making skills, will be able to determine the value of the company using different methods, argue why the results may differ for the same company and assess which value should be used in different situations (analysis and valuation of the company. In addition, they will be able to communicate with stakeholders and communicate the information obtained to a wider audience, assessing how qualitative aspects (social responsibility, sustainability, ethical aspects and strategy) can influence the company's value and investors' decisions.
Logical learning techniques, motivational methods to attract and retain students' attention, motivational challenges and constructive criticism, and problem-based teaching methods will be used in teaching.
Brief course content
1. Financial analysis of income statement, balance sheet and cash flow statement.
2: Financial Reporting Standards and financial statements.
3. Basics of Financial Mathematics behind. Basics of compounding, discounting.
4. Basics of Financial Mathematics behind. Valuation of the present value model, infinite geometric series.
5. Basics of Business Valuation - Discounted Cashflow Model - introduction.
6. Functionality of the DCF model, the finite and infinite series calculation.
7. Calculation of expected rate of return: returns and standard deviation.
8. Basic of the Capital asset pricing model (CAPM).
9. The cost of capital and calculation of the average cost of capital or WACC
10. Building your first Excel Valuation model: Part I.
11. Building your first Excel Valuation model: Part II.
12. Final assessment: complex quiz.
13. Mathematical functioning of multipliers, selecting and forming a peer group.
Recommended References
Damodaran, A. (2011): Little Book of Valuation: How to Value a Company, Pick a Stock and Profit, Hoboken, N.J., Wiley, 256 s., ISBN: 978-1-118-00477-7.
Massari, M., Gianfrate, G., Zanetti, L. (2016): Corporate Valuation: Measuring the Value of Companies in Turbulent Times, 512 s., ISBN: 978-1-119-00333-5.
Pratt, S. P. (2022): Valuing a Business, The Analysis and Appraisal of Closely Held Companies, 6th. ed., 2479 s., ISBN-13: 978-1260121568.
Schmidlin, N. (2014): The Art of Company Valuation and Financial Statement Analysis: A Value Investor's Guide with Real-life Case Studies, 264 s., ISBN: 978-1-118-84309-3.
Wessels, D., Goedhart, M., Koller, T. (2020): Valuation: Measuring and Managing the Value of Companies, 7th. Ed., McKinsey a Company, Wiley, 896 s., ISBN: 978-1-119-61088-5.
Recommended optional program components
In addition to classroom teaching, synchronous and asynchronous online teaching is also offered.
Languages required for the course completion: English
Notes The course is taught in blocks in English.