Financial Forensics: Illuminating Shareholder Value Drivers

Learning Objectives

• To discuss the role of shareholder value as a significant reward for owners in the context of commercial lending.
• To analyze key drivers influencing the projection of enterprise shareholder value growth, including factors such as sales growth rate, tax rate, and profitability.
• To explain and evaluate the impact of working capital and fixed asset investments on shareholder value, considering their role in strategic financial planning.
• To examine the weighted cost of debt and equity capital and its implications for short-term and long-term alternatives to accelerate shareholder value growth.
• To inspect and explore effective strategies and alternatives for optimizing shareholder value growth in both short-term and long-term scenarios, fostering a comprehensive understanding of the dynamics involved.

Course Description

Embark on a transformative journey in the domain of commercial lending with our extensive three-part series. Engage in a dynamic learning experience as we demystify the complexities surrounding the assessment of financial performance, projection of repayment capability, and the enrichment of shareholder value. Dive into the third and final segment of our series, which specifically delves into the crucial aspect of Shareholder Value.

Major topics covered in this CPE Finance course:

• Role of shareholder value as a reward to owners
• Key drivers in the projection of enterprise shareholder value growth
• Sales growth rate
• Tax rate and profitability
• Working capital investment and fixed asset investment
• Weighted cost of debt and equity capital
• Short-term and long-term alternatives to accelerate shareholder value growth

Commercial borrowers in the banking sector demand a thorough evaluation, requiring lenders to assess both short-term and long-term potentials. The cornerstone lies in understanding the elements that contribute to positive cash flow—solid financial performance, sustainable operating practices, and a stable financial condition. By projecting a borrower's financial performance, we dissect underlying assumptions and forecast income statements, balance sheets, and cash flow statements. This detailed analysis quantifies future cash flow, essential for debt repayment, dividends, and strategic investments.

Beyond traditional lending practices, our series emphasizes building shareholder value to ensure long-term engagement and commitment from owners. Discover the discounted value of future cash flows and the key drivers influencing them. Explore the role of effective working capital management and strategic capital expenditures in accelerating shareholder value.

A successful banking relationship extends beyond the yearly or seasonal, considering the borrower's financial performance for the long haul. Our series guides participants in evaluating if borrowers possess the financial strength for sustained growth and the ability to increase shareholder value. 

Join this transformative 3-part series by Dev Strischek that equips participants with the skills to navigate complex financial landscapes and make informed lending decisions.

Overview

• Value chain analysis

  4 mins
• Discounted cash flow's (DCF) shareholder value drivers

  14 mins
• Working capital asset conversion cycle

  25 mins
• Shareholder value (SHV) driver - Weighted avaerage cost of capital (WACC)

  34 mins
• Shareholder value calculation

  43 mins