Business Analysis & Valuation Tool
The Business Analysis and Valuation tool allows users to analyze a company's financial statements and estimate the company's intrinsic value. This software tool, specifically designed for the Business Analysis and Valuation course, enables users to enter information from financial statements for a company, standardize them to a common format, make any needed adjustments to the company's accounting, and make assumptions about the company's future performance. The model then provides financial ratios for the company, with benchmarks for the U.S. economy, company pro forma financial statements, and a company valuation using several standard valuation techniques.
Once a user enters company financial statement data into the Business Analysis and Valuation (BAV) Model, this powerful customized Excel tool enables them to standardize data to a common format, make any needed adjustments to the company's accounting, and make assumptions about the company's future performance. The model then provides financial ratios for the company, with benchmarks for the U.S. economy, company pro forma financial statements, and a company valuation using several standard valuation techniques.
The BAV tool guides users through each step in the process. The BAV Dashboard leads users through the process and notes completion of each stage of data classification and analysis.
Detailed instructions provide assistance to users, and Help links throughout the product provide contextualized assistance on every aspect of the model. Additionally, many cells in the tool have comments to assist users with understanding the nature of calculations within the model.
Users can stipulate how many years of historical financial data to analyze. Then the model allows users to classify each unique data label name provided by the original data source to create a standardized data set for analysis. This standardization is applied to Income Statement, Balance Sheet, and Statement of Cash Flows data. The model allows users to then toggle between Equity and Asset valuations for the data set.
To facilitate data standardization, the model provides common industry data label titles to assist users in selecting the appropriate standard classification.
Classification results in a Standardized Financial Statements data set that can then form the benchmark for valuating future financial performance.
Predicting future financial performance relies on assumptions to be set by the user. The model provides users with guidance on how to adjust financial statements for any accounting problems they observe in a firm's reporting, and then shows the impact of the new accounting on ratios and valuation analysis.
These Key Assumptions are then shown to the user in the context of the company's historical ratios and valuation forecast horizon.
In addition, to help users make better forecasts of future performance, the model benchmarks company data against comparably performing firms.
The model also provides Pro Forma Financial Statements and a Valuation Summary for users. Additionally, users may save up to 5 valuation scenarios based on the same initial company financial data.
The version used by HBS students allows automatic importing of data via the Internet, and plans are underway to release this feature with all versions of the tool in the future.
For more information and to purchase the Business Analysis and Valuation Model, go to HBS Publishing.
