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Submitted By jenny21223
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CORPORATE FINANCE COURSE

CORPORATE FINANCE 2.1
Working Capital Management
Sept. 2014
Ir Frank W. van den Berg mba

Vrije Universiteit, Amsterdam
ALYX Financial Consultancy

bv,

Aerdenhout

FWvdB/2014

1

OUTLINE CORPORATE FINANCE
FWvdB/2014


Basics & Guiding principles

Time value of money + Capital Budgeting

Valuation of CF + Bonds

Valuation of shares (+ co.’s)

Financial Analysis (Ratios)

Financial Planning (EFN)
• à Working Cap. Mgt. (A/R, Inv., A/P)

Debt Financing




2

FIN
1.5

FIN
2.1

Entrepreneurial Finance / Raising Equity
Mergers & Acquisitions / Corp. Restructuring

FINANCIAL RATIOS - Example 1
FWvdB/2014

Sample Balance sheet (000’s €)
Cash + bank
500
Accounts Receivable 5.000
Inventory
3.000
------CA
8.500
Machinery
Buildings

6.000
4.000

Total assets

-------18.500

STB (bank credit line)
Accounts Payable
CL
LTD (Bonds)
Nom. Cap. (500.000 x 2)
Paid-in-capital (x 3)
Retained Earnings
Treasury Stock
Shareholders’ Capital
Total liabilities + OE

3

3.000
3.000
------6.000
6.000
1.000
1.500
4.500
- 500
6.500
-------18.500

RATIOS: SAMPLE INCOME STATEMENT
REVENUES (= Sales = Turnover)
CGS = Costs of Goods Sold (materials, labor costs
+ energy costs incl. 1.000 depreciation)
GROSS PROFIT
SGA= Selling Administrative & General Expenses
(incl. overhead, management, insurance, marketing)
EBIT = Earnings Before Interest and Tax
Interest Expense (say: 5% x (3.000 + 6.000))
PBT = Profit Before Tax
CIT = Corporate Income Tax “Vpb” (say 35%)
FWvdB/2014

NET PROFIT (Net Income = Net Result)

25.000
-15.500
--------9.500
-7.820
------1.680
- 450
------1.230
- 430
-----800

4

WORKING CAPITAL
WC = Current Assets – Current Liabilities
CA = [cash + short term investments (money mkt. inst.)]
+ inventory
+ accounts...

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