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The three pillars of financial analysis in .NET Generation 2d Data Matrix barcode in .NET The three pillars of financial analysis

The three pillars of financial analysis using barcode integration for .net framework control to generate, create data matrix image in .net framework applications. GS1 Standards Knowledge Centre The cash flow c VS .NET Data Matrix alculation does need to be explained. Opening debt plus cash flow equals the closing debt.

The interest charge is explicitly shown here and is calculated as the interest rate times the opening debt plus half of the interest rate times the cash flow (the cash flow is mid-year). This is where the circularity arises because interest is part of cash flow. When I inputted the coding for this calculation I got an error message warning of the circularity.

The solution was also suggested and it concerned switching on an iterative calculation mode. In Excel you can switch on iterations via the Tools; Options; menu. Then select the Calculation Tab and check the iterations box.

Note also the terminal-value calculation. This uses the growth-to-perpetuity formula. Calculation of the necessary funds flow figure is explained below.

We have already seen YMCC s LTP. We can now strip the financing items out of it to produce an AFS (table 7.11) in the traditional format and use this to calculate the economic value of YMCC.

Notice that in the profit-and-loss account the change from the LTP is to exclude the interest charge and also to increase the tax charge to reflect just tax on operations and not also tax relief on interest. The balance sheets are changed to remove the element of tax relief on interest from the accountspayable figure. This causes a slight change in capital employed.

We also show only one side of the balance sheet in the AFS while the financed plan must show both. The third section of the AFS shows the calculation of funds flow as opposed to cash flow. Finally, the AFS shows the value calculation.

The main element of value is the terminal value. This is always the case when one values a five-year plan. The calculated value of YMCC as at 1 January 2008 is $132.

4m. Since the opening level of debt was $25m (see final line of assumptions), the value of the equity in YMCC is $107.4m.

Note that a spurious level of accuracy is implied in quoting the value to the nearest $0.1m but this is what one would do as the aim is faithfully to convert assumptions into a valuation. The plan as presented is, if one believes the numbers, credible.

Gearing does rise substantially but not to a level that would fundamentally threaten the viability of YMCC. When one is dealing with a plan that includes financing effects it is always essential to carry out a sense check to ensure that it looks credible. Suppose that we were to change the assumed selling price by about 10% from $390/te to $350/te.

The spreadsheet will automatically produce a new long-term plan as shown in table 7.12..

The first pillar: Modelling economic value Table 7.11 Yellow Moon Chemical Company Inc: Abbreviated Financial Summary $m 2009 Sales reve nue Variable costs Contribution Fixed costs Amortisation Pre-tax profit Tax Net profit Fixed assets Accounts receivable Accounts payable Inventories Net working capital Capital employed ROACE Profit Amortisation Working cap Capital investment Funds flow Funds flow Discount factor PV funds flows Cumulative PV 76.1 21.5 54.

6 30.0 6.0 18.

6 6.5 12.1 67.

0 19.0 12.6 8.

6 15.0 82.0 17.

4% 12.1 6.0 1.

3 23.0 3.6 3.

6 0.958 3.5 3.

5 2010 78.7 22.5 56.

2 31.8 5.7 18.

8 6.6 12.2 90.

1 19.7 13.7 9.

1 15.1 105.1 13.

0% 12.2 5.7 0.

0 28.7 10.9 10.

9 0.879 9.6 13.

1 2011 82.7 23.5 59.

2 35.7 7.6 15.

9 5.6 10.3 86.

2 20.7 10.7 9.

9 19.9 106.1 9.

8% 10.3 7.6 4.

8 3.7 9.4 9.

4 0.806 7.5 5.

5 2012 87.7 25.3 62.

4 36.6 7.7 18.

1 6.3 11.8 82.

7 21.9 11.4 10.

3 20.8 103.5 11.

2% 11.8 7.7 0.

9 4.1 14.4 14.

4 0.740 10.6 5.

1 2013 93.0 27.3 65.

7 37.5 7.8 20.

4 7.1 13.3 79.

5 23.3 12.2 10.

8 21.8 101.3 13.

0% 13.3 7.8 1.

0 4.6 15.5 15.

5 0.679 10.5 15.

6 TV 172.1 0.679 116.

8 132.4. This LTP is not barcode data matrix for .NET viable. Several observations lead me to this conclusion.

To start with, the dividend in the final three years is greater than the profit. Now take a look at the gearing and also the interest charge as a percentage of pre-tax profit. It is unlikely that a bank would want to lend money to a company in this state.

The first thing one would need to do is reduce the dividend since the company clearly could not afford to pay this level of dividend if the selling price of its products were to be as low as $350/te. If one reduces the first-year dividend from $4m to $1m the numbers in the LTP would then be as in table 7.13.

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