Introduction to Financial Restructuring DF2-264-I
This technical note explains what a financial restructuring of a company involves, differentiating it from other types of transactions which share similarities, such as operational restructurings or debt refinancings. It also explains the main financial tools generally used in financial restructuring deals, their advantages and main implementation principles.
At the end of the note, the author includes a practical example of financial restructuring in a food processing company.Academic Area:Financial Accounting | Finance
THE COST OF CAPITAL DF2-141-I
This material focuses on determining the rate of return that will satisfy shareholders’ expectations and how to achieve it. It explains how to find the discount rate that represents the cost of the resources that will finance future investments and how to figure out the cost, or the WACC, by weighting the cost of debt and equity as a function of their relative importance in the company’s capital structure. In addition, it covers how to calculate the cost of debt based on the Gordon-Shapiro share pricing model and based on Sharpe’s asset valuation model using real-life examples and historical data. The case stresses that the manager must know how to add value to the investment; shareholders are entrusting the manager with their investment and expecting a higher rate of return than they could get without him. It wraps up by including an FAQ on WACC.Academic Area:Finance
RATING AGENCIES PROCESS: HOW TO DEAL WITH THIS NECES … DF2-223-I
Undoubtedly, obtaining a credit rating is one of the paramount decisions for any company to make during its entire existence as a going concern. From that moment on, not only will its corporate status be deeply modified bringing about a number of new additional requirements to comply with. Its overall relationships with its stakeholders will no longer be the same. Even the potential decision to turn back to the prior situation by relinquishing its rating and becoming unrated again, which is perfectly possible, will have meaningful implications going forward.
This technical note is addressed to those enrolled in the Global Masters in Finance (GMIF) programs, particularly in connection with the “Introduction to the Capital Markets” subject. This paper also directly relates to all other subjects covering corporate finance and financing issues in the same program, as well as to the MBA programs and specialized finance courses.Academic Area:Finance
Company Valuation, a graphical approach DF2-221-I-M
This interactive tutorial describes in a very simple manner the four valuation methods: accounting method liquidation method discounting of cash flows and ratios. Using animations and graphs it shows what each of these methods measures focusing on the balance sheet.
The last section of this tutorial is an exercise where students have to apply the four valuation methods for a fictitious company. The objective is for them to see a graphical comparison of the different values obtained under each one of the methods.
This tutorial has been used successfully in undergraduate, graduate (in particular MBA, Masters in Finance and Masters in Management courses) and executive education level finance courses, both in online/blended and face-to-face formats.Academic Area:Finance
DETERMINING THE OPTIMAL CAPITAL STRUCTURE FOR A FIRM DF2-220-I
The aim of this technical note is to provide the tools necessary to determine a firm’s optimal capital structure so that the financing function of the company contributes to creating value for shareholders. Finally, it summarizes the factors that should guide finance directors during the transition from their current financial structure to an optimal one.Academic Area:Finance
Islamic Finance DF2-216-I-M
Islamic finance is a tutorial that shows the main concepts and financial instruments used by Sharia-compliant Financial Institutions. This tutorial focuses on the main operations and contracts in the business environment but also shows through examples the Sukuk or Islamic bonds that continually attract more and more buyers.
The tutorial includes:
- A glossary of Arabic terms commonly used in Islamic finance and Sharia
- Flow diagrams to explain the contracts and flow of funds for the most common Islamic financial instruments
- Flow diagrams to explain the contracts and flow of Sukuk also referred to as Islamic Bonds
- A series of examples based on the application of Islamic financial instruments in different scenarios.Academic Area:Finance
Investing with Talent DF2-123-I-M
This interactive tutorial demonstrates the concept of time value of money and how it is applied in the evaluation of investment opportunities. Two basic tools that rely on this concept the Net Present Value (NPV) and the Internal Rate of Return (IRR) are described and compared to each other and to some more intuitive alternative methods.
These numerical techniques are explained in an easily-understood visual manner through a series of interactive graphs and animations. Questions and numerical exercises throughout allow students to apply these concepts and reinforce the learning objectives.
This interactive tool has been designed to complement the paper based tutorial also included which provides a more in depth discussion of the concepts and their application.Academic Area:Finance
Accounting as a source of Information for financiers DF2-162-I
The general accounts are a useful tool for the company and are intended as a source of information. This information has to follow a set of rules and principles and must be recorded using the principle of double-entry bookkeeping. The finance department’s guiding principle is to "maximize the long-term economic value for shareholders." To generate economic value in the long term, the returns obtained from management of the assets in the normal course of business must exceed the financial cost of the resources funding them.
This technical note explains how concepts of accounting are particularly useful to obtain certain financial information. It talks about general accounting and its guiding principles, the profit and loss account, the balance sheet, accounting statements, liabilities, equity, assets, accounting records, depreciation, provisions, investment and financing decisions and finally cash flows, weighted average cost of capital and discounted cash flow.Academic Area:Financial Accounting | Finance
Optimal Capital Structure DF2-161-I-M
This interactive tutorial explains the concept of the optimal financial mix. Through animations interactive graphs and very simple exercises students will understand and apply this concept.
At the end of the tutorial a practical multimedia case is included where students must find the optimal financial mix for maximizing the value of the investment projects.Academic Area:Finance