INTRODUCTION

Ideally, organisations are looking for investments that can deliver high returns which may also translate to higher investments risk. Truthfully, not all investments are able to generate the required returns and organisations have to be prepared to lose. Typically, the decision criteria for investing in a business involve market potential, growth opportunity, long term sustainability, exit opportunities and most important, quality of management. Therefore, exposure to the profitable investment strategies which are widely used among practitioners is crucial in guiding the organisation’s decisions.

 

OBJECTIVES

The course aims to provide basic understanding on capital investment appraisal and equity investment. The course is highly participative and designed as knowledge sharing sessions based on practical cases and up to date issues in the subject matters. At the end of the program, the participants will be to:

  1. Gain knowledge and understand different capital investment appraisal and equity investment approaches.
  2.  Identify the steps involved in the capital investment appraisal and equity investment process.
  1. Develop analytical skills to evaluate capital investment and equity investment proposals.
  2. Analyse and appreciate the contemporary issues.

 

CONTENTS

The training modules will cover the followings:

·     Module I - The Ideal Business.

·     Module II – Basic Capital Investment Appraisal.

·     Module III- Basic Valuation of a Business.

·     Module IV- Basic Forecasting.

(The details are as per attachment)

 

ADMINISTRATIVE DETAILS

·        Training duration          :           3 days

·       Maximum participants   :           25 persons per class

  

ATTACHMENT

MODULE 1 - AWARENESS: THE IDEAL BUSINESS

 

1.     Criteria - Business with a Competitive Durable Advantage

·        Selling a unique product or services

·        Low cost buyer and seller

·        Public consistently wants

2.     How to look for the ideal business

·        Historical Financial - Trust is earned.

i.       Income Statement

a.     Revenue

b.     Gross Profit Margin

c.      Selling, General and Admin

d.      Research and Development

e.      Depreciation - non-cash

f.        Interest expense

g.      Gain/(Loss) on Sale of Assets

h.      Net earnings

ii.      Balance Sheet

a.       Cash or nothing

b.       Inventories

c.        Receivables

d.       Property Plant and Equipment

e.       Goodwill

f.         Other Intangibles

g.       Long Term Investment

h.       Payables

i.         Short Term Borrowings

j.         Long Term Borrowings

k.        Retained Earnings

iii.   Cash Flow

a.       Operating Cashflow

b.       Management of Working Capital

c.        Non-Operating Cashflow

3.     When to buy and when to sell?

 

MODULE II - BASIC CAPITAL INVESTMENT APPRAISAL

1.     What is capital investment

2.     Time value of money

3.     Basic Capital Investment Methods

·          Net Present Value

·          Internal Rate of Return

·          Payback Period

4.     Cost of Capital

·          Cost of Debt

·          Cost of Equity

i.      Capital Asset Pricing Model (CAPM)

ii.    Gordon Growth

·          Weighted Average Cost of Capital (WACC)

5.     Issues in application

 

MODULE III - BASIC VALUATION OF A BUSINESS

1.     What is value?

2.     Purpose of valuation

·        Investment - passive

·        Investment - active

·        Exit - passive

·        Exit – active

3.     Valuation Process

·        Understanding the Business

a.     Life Cycle

b.    Prospect

c.    Key success factor

d.    PEST

e.    Forces

·        Selection of Methods

a.   Discounted Cash Flow

b.   Relative Valuation

c.   Assets Based

                                   

MODULE IV - BASIC FORECASTING

1.     Lessons from History

2.     Top Down Approach

·        General Economic Growth

·        Sector Growth

·        Players

3.     Bottoms Up Approach

·        Needs or Wants

·        Products

·        Players

4.     Ratios

5.     Profit and Loss

·        Revenue

·        Cost of Sales

·        Depreciation

·        Other Expenses

6.     Balance Sheet

·        Debtors

·        Creditors

·        Fixed Assets

·        Financing

·        Cash Balances