This course covers the new lease accounting rules. The difference between US GAAP and IFRS treatment is stressed. The modeling of both operating and capital leases, as well as the impact on valuation is covered.
- Lease overview
- Finance leases
- Operating leases
- Accounting for leases
- Income statement impact
- Balance sheet impact
- Modeling finance and operating leases
- Valuation impact
- EBIT
- EBITDA
- Trading comps
- DCF
This course begins with an explanation of income tax terminology. Deferred tax assets and liabilities are then examined in detail with a discussion of how they are created and unwind over time. Modeling DTAs and DTLs is also covered.
- Income tax terminology
- Taxes for book purposes vs. taxes for the tax authorities
- What are deferred taxes
- Common DTAs
- Common DTLS
- How they unwind over time
- Valuation allowance
- Temporary vs. permanent differences
- ETR vs. MTR
- Modeling deferred taxes
During the M&A accounting course, full consolidation, noncontrolling interest and equity / associate method investments are covered.
- Full consolidation for acquisition of 100% of a company
- Noncontrolling interest (acquisition of >50% but <100%)
- Equity method / associate investments (acquisition of >20% but <50%)
- Consideration paid
- Calculating goodwill
- Consolidating the income statement and balance sheet
- Impact of M&A transactions on earnings
- Deal financing
The financial statement analysis course provides participants with the “nuts and bolts” of accounting, from a financial analysis perspective. As a solid accounting foundation is critical to grasping more advanced finance concepts, the course prepares participants for subsequent modeling and valuation modules. The course focuses on accounting fundamentals emphasizing the interrelationships between the 3 financial statements. Throughout the course, actual company annual reports are analyzed to show real examples of accounting treatment and disclosure notes.
- What’s in an annual report and where to look (MD&A, financials, notes)
- Structure of 3 financial statements (income statement, balance sheet, cash flow statement)
- Key links between 3 financial statements
- Impact of transactions on 3 statements
Income statement
- Revenue recognition and the matching principle
- Accrual vs. cash accounting
- Types of profits and expenses
- EBIT and EBITDA
- Cleaning earnings for non-recurring items
- Effective tax rate vs. marginal tax rate
- Normalized net income
- Basic vs. diluted EPS
- WASO versus shares outstanding
- Profitability ratios
Working capital
- Working capital vs. operating working capital
- Components of operating working capital
- Operating working capital as a source or use of funding for the company
- OWC days ratios and cash conversion cycle
Non-current assets
- Tangible vs. intangible assets
- Depreciation and amortization
- Difference between intangible assets and goodwill
- Impairments
- Capital expenditures and asset sales
Debt and equity
- Debt vs. long term liabilities
- Current and long term portions of debt
- Senior vs. subordinated debt
- Amortizing vs. bullet payments
- Cash and PIK interest
- Leverage and coverage ratios
- Debt disclosure note
- Common vs. preferred stock
- Authorized, issued and outstanding shares
- Par value and additional paid-in capital
- Share issuances and repurchases
- Retained earnings
- Dividends
Cash flow statement
- Operating, investing and financing cash flows
- Building a cash flow statement from scratch
- Best practices to always ensure your model will balance