Financial Modelling and Valuation

Assignment 01

Submitted By: Suyashi Bansal

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 Table of Content

1. Equity Market

2. Equity Research

3. Financial Modelling

4. Role of Equity Analyst

5. Buy Side and Sell Side

6. Organizations to work with as Analyst

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Equity Market

The equity market is a marketplace for traders where they buy or sell stocks. Investors can
invest in public or private stocks.

When companies are born, they are private companies, and after a certain time, they go
through an initial public offering (IPO), which is a process that turns them into public
companies traded on a stock exchange. Private stocks operate slightly differently as they are
only offered to employees and certain investors.

An equity market is a form of equity financing, in which a company gives up a certain

percentage of ownership in exchange for capital. That capital is then used for a variety of
business needs. Equity financing is the opposite of debt financing, which utilizes loans and
other forms of borrowing to obtain capital.

Equity Research

Equity research is the study of a business and its environment to make a buy or sell decision
about investing in its shares. This research can also be applied by an acquirer to a prospective
acquisition deal, to determine the price at which to bid for the securities of a target company.

Equity researchers analyze stocks to help portfolio managers make better-informed

investment decisions. Equity researchers employ problem-solving skills, data interpretation,
and various other tools to understand and predict a given security’s behavioral outlook.

Financial Modelling

Financial modeling is the process of estimating the financial performance of a project or

business by considering all relevant factors, growth, and risk assumptions, and interpreting
their impact. It enables the user to acquire a concise knowledge of all the variables involved
in financial forecasting.

A financial model is simply a tool that’s built-in spreadsheet software such as MS Excel to
forecast a business’ financial performance into the future. The forecast is typically based on
the company’s historical performance, assumptions about the future, and requires preparing
an income statement, balance sheet, cash flow statement, and supporting schedules (known as
a 3-statement model).

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Role of Equity Analyst

Equity analysts use their expert knowledge of stocks and bonds to provide financial guidance
to individual investors, brokers, and investment consultants. They gather and assess data on
stocks and bonds, create financial models, and develop forecasts that will lead to informed
decisions about investment opportunities.

They produce research reports, projections, and recommendations concerning companies and
stocks. Typically, an equity analyst specializes in a small group of companies in a particular
industry or country to develop the high-level expertise necessary to produce accurate
projections and recommendations.

Buy Side and Sell Side

Buy-Side – is the side of the financial market that buys and invests large portions of securities
for the purpose of money or fund management.

Sell-Side – is the other side of the financial market, which deals with the creation, promotion,
and selling of traded securities to the public.

Organizations to work with as Analyst

Deloitte

Accenture