[MUSIC] Hi and welcome to know your numbers two, a subject about decision making and valuation. By the end of this course, you'll be able to harness the power of accounting data and financial models to make the best decisions. I'm Keith Woodward and along with my colleagues, David Pitt and Roger Casey, we're very excited to explain our favorite aspects of finance. Here's what we're covering over the next six weeks. I'll be taking you through week one, which is all about the four main financial decisions. Including the investment, funding, working capital, and payout policy decisions. We'll also have fun covering the concepts of opportunity costs and sunk costs. As well as business ownership structures such as sole traders, partnerships, private and public companies, and briefly pass through entities like trusts. It's quite interesting how these different holding structures are affected by the principal-agent problem and tax. David Pitt will run through week two and three classes. In week two, he'll explore the time value of money and cover two of the most useful formulas in finance, the annuity, and the perpetuity formulas. Using these, he'll show you how to find the prices of loans, bonds, and stocks. In week three, David will take you through some of the very interesting capital budgeting techniques, which are used to figure out which are the best business projects. These include net present value, internal rate of return, and payback period. In valuing whole businesses, you'll learn how to calculate free cash flows from accounting profits. David will also introduce some methods to find interest rates, returns or yields that investors deserve on their assets. Whether its bonds, shares, property or even an entire business, these methods include the capital asset pricing model and the weighted average cost of capital. Roger Casey will teach the week four and five classes. In week four, he'll demonstrate a wide variety of models to value businesses, including the residual income, flow to equity, and operating free cash flow models. Most practitioners would agree that this is the hardest, but most interesting part of the course where the accounting data is turned into financial prices. Roger will build on this by showing how to do scenario and sensitivity analysis based on your evaluation. In addition to the DuPont method, breakeven analysis, and equivalent annual cost. In week five, Roger will discuss how individual business projects effect companies' enterprise value. He'll also demonstrate the asset replacement decision, such as when or if you should buy new trucks and sell the old ones. Lastly, he'll cover strategy, management performance measurement, and remuneration, which is how much they get paid, and the perceptions gap. In week six, I'll be back and we'll be working on valuing a startup business using all the methods that David and Roger explained. We'll also look at how to value a new business project using incremental analysis, which is about focusing on the change in cash flows rather than the whole amount. I think you'll enjoy learning these skills about how to decide if a new business project is worthwhile. It's powerful, and whether or not you have a business idea. I'm sure you do, but other people do, and they'll pay you to help them. If you've completed the know your numbers one course, fantastic. That's all the required knowledge you'll need, plus more. If you haven't, it's recommended, and might be worth taking a look at, and some of the concepts explained there are built upon here. So let's get started, see you in the next video.
