Capital Structure and Corporate Finance

In addition to your class tuition and study materials, you will receive the following:


Case Study

• Examining the capital structure of a FTSE 100 company
• Inspection and evaluation of a recent prospectus
• Deriving the cost of capital for a FTSE 100 company
• Deciding an investment strategy using appropriate investment appraisal techniques

Exercises

• Calculating the cost of equity
• Deriving a business valuation based on DCF and relative valuation techniques

Other Extras

• Certificate of attendance

Level: Intermediate


Synopsis:
The world of corporate finance and investment banking explained. This course provides an insight into how the capital structure of a firm can affect shareholder value.


At the end of the course participants will be able to: Identify how capital structure impacts on shareholder risk and reward trade-off . Calculate and interpret the cost of capital . Understand the impact capital structure has on earnings . Identify other models for valuing a business e.g. relative valuation techniques . Examine how capital structure influences business valuation . Examine how capital structure assists in investment appraisal techniques . Consider the main regulations relevant to corporate finance . Identify the major sources of capital . Explain why the capital structure of a business is important .


Prerequisites:
Introduction to Financial Statements


Suitable For:
Individuals working in corporate finance or those seeking to gain further insight into the world of investment banking. This course is also suitable for individuals seeking a greater understanding of the impact capital structure has on business valuation.


An overview of capital

• Defining capital: financial accountant vs. financial analyst
• Why capital structure matters
• WACC and why it is important
• Degree of financial leverage

An overview of the issuance process

• The equity / debt decision
• Sources of capital
• The role of the investment bank
• Sell-side vs. buy-side considerations
• Overview of corporate finance regulations

Calculating the cost of equity

• Dividend valuation model
• CAPM

Calculating the cost of debt

• Basic bond mathematics
• Yield to Maturity Approach
• Accounting for the tax shield

The impact of capital structure

• Business valuation and shareholder wealth
• Modigliani and Miller
• WACC and valuation

Investment appraisal techniques

• Payback / discounted payback
• Accounting ratios e.g. ROCE
• Net Present value techniques
• Internal rate of return techniques
• Advantages and disadvantages of the different techniques

Deriving a business valuation: DCF techniques

• Identifying & forecasting relevant cash flows
• Dividends vs. free cash flow
• Terminal values
• Choosing an appropriate discount rate

Deriving a business valuation: relative valuation techniques

• Price-earnings: market and justified
• Enterprise value multiples
• EBIT / EBITDA
• Other market multiples and their uses in deriving a business valuation

Capital structure and earnings

• Calculating the degree of operating/ financial/ total leverage
• Capital structure and earning volatility
• Identifying the optimal capital structure