Schemes of Accounting, Finance & Control
Introduction: -> Is the CONTROL part of the Plan & Control Cycle: GOALS: -> CEO & Shareholders. -> Indicators: -> The hp that we can deploy a long-term strategy is not applicable: it’s difficult to foresight what will happen in 10 years. (we assume we can still do that). PLAN of ACTIONS (Budgeting): -> DEF: […]
Management Reporting Leggi tutto »
-> DEF: indicators which provide managers with earlier signals (drivers) of value creation: Introduction: -> Untill now we analysed: -> PROBLEMS: => We need another type of indicators: the VALUE DRIVERS. The “Value” Tree: -> DEF: tools to understand how increase the equity or enterprise value. -> CHAR: EBITDA = REVENUES – CASH COST CASH
Value Drivers & Scorecard Leggi tutto »
-> Last part of the course: PLAN & CONTROL. TARGETING: means set the goals (that we can connect with the balanced scorecards) and it’s linked with the concept of budgeting. Timing: till now the analysis was about the past with the ratio analysis. To compute the Enterprise value and the Equity value we need the
Budgeting & Target Settings Leggi tutto »
-> DEF: The value of an asset is compared to the values assessed by the market for similar or comparable assets. -> CHAR: -> IS PERVASIVE: “A little inaccuracy sometimes saves tons of explanation” H.H. Munro “If you are going to screw up, make sure that you have lots of company” Ex-portfolio manager. -> There
Relative Valuation Leggi tutto »
VALUE BASED INDICATORS: -> DEF: indicators that look to the future and try to predict the result of the company. -> Today is a FINANCIAL Prospective; Cash Generation Cycle: -> Consider the most relevant Cash Flows (not exhaustive): ENTERPRISE: subject of the discussion; SHAREHOLDERS: are the one that give the Equity to the enterprise. DEBTHOLDERS:
Corporate-Finance Analysis Leggi tutto »
CAPITAL: everything that a company has in terms of resources (the value of the company). BOOK VALUE of the COMPANY: calue of the assets of the company. Rappresentation of the company: ASSET PERSPECTIVE EQUITY & LIABILITIES PERSPECTIVE: INVESTED CAPITAL: capital invested in the resources for the production or to provide services = equity + financial
-> DEF LEVERAGE = D/E (Corporate Strategy => D = only financial liabilities). -> DEF: Ratio between the liabilities and the equity: -> Company increase the debt by borrowing money to sustain the investment strategy to grow, buy equipement, invest R&D … -> ⚠It is NOT reducing the equity or increasing dividends. -> OBJ: understand
Analysis of the Leverage Leggi tutto »
-> OBJ: evaluate the status of liquidity and its “coherence” to existing present obligations Connetc these number to the strategy. RATIOS are used two different perspectives: -> Don’t use the financial statement, is the most important component of the profitability analysis (try to explain revenue and costs and the focus is on the cash flows
Liquidity Analysis Leggi tutto »
-> Matrix used by auditing & consultancy companies. Axes: -> In both we consider the average of the industry where the co9mpany is competing (available online). ORIZONTAL (Operational Efficiency) AXIS: ROA, Return On Assets (=EBIT/Tot Assets) -> revenue/ operating costs; VERTICAL (Risk) AXIS: tot liabilities/ revenue; -> PARETO APPROACH: Consider whose company that the sum
The Risk or Operational Efficiency Matrix Leggi tutto »
-> IDEA: aim of annual report is to provide a quick and useful overview of the company’s main results (performance). Summarize information about: ❓Why are they call Accounting-Based Indicators? -> Because the main data come from financial reports. ❓What are Accounting based indicators? -> They are financial indicators because they are calculated on the financial
Accounting Based Indicators Leggi tutto »
