CHAPTER 6

Financial Modeling—Real Life Illustrations

Different Types of Financial Models

(a) Earnings model for projection of business performance

(b) Debt/recapitalization/financing model

(c) Merger consequence model for merger or acquisition/divestiture

(d) Business valuation models

Financial Modeling in Investment Banking

Investment Banks

Financial analysts at leading investment banks have added proprietary discounted cash flow models and new acronyms. But remember that be it Credit Suisse’s Cash Flow Return on Investment (CFROI) model, Morgan Stanley’s ModelWare or UBS’s Value Creation Analysis Model (VCAM), the fundamental premise is that the value of an investment derived by DCF models is the present value of its expected, future cash ...

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