Live session #3 12.03.2014

LIVE SESSION #3 WEDNESDAY MARCH 12TH 2014

FINANCIAL ANALYSIS MOOC WITH MARC BERTONECHE

INTRODUCTION



Boston Medical Instruments Case Study

Answer a quiz and submit your own analysis of the case which will be corrected by peers

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To obtain the Attestation of Success, you need an average grade to the MOOC of 60%. Final grade will be calculated as follows: 50% for Quiz 1 to 4 and 50% for Week 5: Boston Medical Instruments quiz + analysis

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Week 5 - Attestation of Success



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Internally Generated Funds (IGF) is the difference between all revenues and all expenses materialized by a real cash inflow or a real cash outflow

IGF = Net Profit + Depreciation and Amortization

Cash Flow from Operations is the difference between all cash inflows and cash outflows related to the day-to-day operations

CFO = Net Profit + Depreciation and Amortization +/- Change in Net Working Capital

Internally Generated Funds

Cash Flow from Operations



The Dynamic Financing Analysis

1. Investment policy analysis

2. Financing sources of the company through time• With the cash flows from operations• Other sources: debt issue or capital increase

3. Study the debts structure: maturities, ratings, rates, currency…



The Static Financing Analysis

Measures the capacity of a company to payback its debts in due time With a business plan and projected cash flows With the “dirty analysis” using ratios like net financial debt / EBITDA Keep in mind that this ratio is only relevant if the change in net working capital is negligible You must consider the industry as well



The Dynamic Financing Analysis In thousands of Euros 1996 1997 1998 Net income 1 232 1 440 1 897

+ Depreciation & Amortization 207 519 653- Gains + Losses on sale of fixed assets - 74 -= Internally Generated Funds (1) 1 439 2 033 2 550- Change in working capital (2) 12 1 642 5 094

= Cash flow from operations (1) – (2) = (3) 1 427 391 (2 544)

+/- Cash flow from investing activities (4) (397) 1 515 (1 323)=

Free cash flow after financial expenses (3) - (4) 1 030 (1 124) (3 867)+ Share issue - 1 975 49- Dividends 400 440 496

= Decrease (Increase) in net debt 630 411 (4 313)

Net debt at beginning of accounting period (465) (1 095) (1 506) Net debt at end of accounting period (1 095) (1 506) 2 807



In thousands of Euros 1996 1997 1998= Net Financial Debt (1) (1095) (1506) 2807= Operating Income or EBIT 1873 2235 2761+ Depreciation 207 519 653= EBITDA (2) 2080 2744 3414DEBT / EBITDA (1)/(2) -0,53 -0,55 0,82

The static financing analysis



Apple, with $145 billion in cash, wants to borrow money. Why?



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Jeff Fluhr Interview

Entrepreneur and business operator,Jeff Fluhr created, ran and eventually sold

StubHub to eBay in 2007.

Live session #3 12.03.2014

Education

Transcript of Live session #3 12.03.2014