Sumários

Unilever case + Investment Appraisal and cost of capital

21 Outubro 2019, 10:00 • JOÃO CARLOS CARVALHO DAS NEVES

Unilever case study

Part II - Investment Appraisal

Cost of capital

Models to calculate the cost of equity

CAPM, Gordon model, M&M

The CAPM parameters, how to find them: risk free rate, beta, equity market risk and country risk premium

Risk assessment using the income statement

16 Outubro 2019, 10:00 • JOÃO CARLOS CARVALHO DAS NEVES

The importance of risk management and assessment nowadays

Mapping the risks evidence ample type of risk

Operatinal and financial risk as analysed by financial courses and book do not show the whole picture

Definitions: fixed costs, variable costs, direct costs, indirect costs

Break even point - in quantity and in monetary terms (either operational break even or total break even)

Operational safety margin and total safety margin

How to improve break even and safety margin - key drivers for decisions:

- Volume of ales

- Selling prices

- Unit prices of resources of variable costs

- Efficiency of operations

- Reduction of fixed costs

- Improve product mix decision (sell more products that have higher contribution margin) and pay attention if there are any operational constraints that may increase costs (that is marginal costs being higher that variable unit costs)

Degree of operational leverage, Degree of financial leverage and Degree of combined leverage

Conclusion

Cash Flow Statement Analysis and Sustainable Growth Rate Analysis

14 Outubro 2019, 10:00 • JOÃO CARLOS CARVALHO DAS NEVES

Cash Flow Statement Analysis:

- Cash Flow statement - the accounting structure

- The direct approach (the only accepted by IFRS now) and the indirect approach

- IFRS approach versus GAAP approach - discussion of these accounting approaches in contrast to a financial approach of the investing cycle, the operational cycle and the financing cycle (both LT and ST)

- The managerial cash flow statement

- The indirect approach to cash flow - an example

- The comparison to the FCFF (Free cash Flow to the firm)

- How the indirect approach can be used for financial planning

Sustainable growth rate:

- The Higgins formula

- Main assumptions of the sustainable growth rate - Operating assets (fixed assets and WCR) are proportional to sales, D/E remains stable, return on equity and pay-out ratio. Any change in these ratios may change sustainability

- The matrix of growth and expected impact on the liquidity of the firm

Profitability assessment

9 Outubro 2019, 10:00 • JOÃO CARLOS CARVALHO DAS NEVES

Drivers of profitability

Pestle analysis

Criticism to Duppont model and improvements to generate the integrative model

Integrative model of ROE based on additive model

- Strategic and operating impact

- Capital strutcure policy impact

- Non-recurring items impact

- Tax income impact