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
 30$ for students and 70$ for professionals
 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
 Bonus points will reward those participating actively on the forums!
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

Net Financial Debt (1) (1095) (1506) 2807
Operating Income or EBIT 1873 2235 2761
+ Depreciation 207 519 653
= EBITDA (2) 2080 2744 3414
DEBT / EBITDA (1)/(2) -.53 -.55 .82

Net Financial Debt (1) (1095) (1506) 2807
Equity (2) 2 514 5 489 6 939
DEBT/EQUITY RATIO (1)/(2) - .43 -.27 .40

CURRENT ASSETS (1) 3 033 6 319 11 274
CURRENT LIABILITIES (2) 1 336 2 569 6 743
CURRENT RATIO (1)/(2) 2.27 2.46 1.67

CURRENT ASSETS 3 033 6 319 11 274
- Inventories (969) (2 612) (5 135)
= Current assets – inventories (1) 2 064 3 707 6 139
CURRENT LIABILITIES (2) 1 336 2 569 6 743
QUICK RATIO (1)/(2) 1.54 1.44 .91

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

YOUR QUESTIONS

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

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Live session #3 12.03.2014