FINANCIAL ANALYSIS Introductory level Radim Vyhnánek senior credit risk analyst Citibank Europe...

FINANCIAL ANALYSISIntroductory level

Radim Vyhnáneksenior credit risk analyst

Citibank Europe plc.

24th February 2011

Few facts about the lecturer

1978

2001

2005

salesman analyst

1997-2002

Agenda

I. What is Financial analysis good for? (16:20 – 16:40)

II.Terminology used in Financial Analysis (16:40 – 17:30)

III.Case study #1 “Vodo-topo Kohoutek a syn s.r.o.” (17:40 – 18:40)

CREDIT ANALYSIS FRAMEWORKČEČETKOVA CIBULE

I. What is Financial analysis good for?

Macroeconomics(Global Economy, Industry Outlook, Local Economy)

Ownership, Senior Management

Business Structure Strategy Operations KSFs

Risk/Mitigants

Deal Structure/Security

Ways Out

Rationale & ReturnsCredit Recommendation

Financial PerformanceHistoricalForecastsRatio Analysis

II. Terminology used in Financial Analysis

We will jointly skim through key items in the following sheets:Profit & Loss Statement / Income StatementBalance SheetCash FlowCommonly used Financial Ratios

You are expected to ask questions and become familiar with the terminology by the end of this section.


1. Profit & Loss Statement / Income Statement

Revenues, Costs

Gross Profit (/Value Added), EBITDA, EBIT, EBT, EAT/NI

Depreciations, Reserves & Provisions


2. Balance Sheet

ASSETS (USES)

LT Assets

Intangibles

Tangibles

Financial Investments

LT Receivables

ST Assets

Inventory

ST Receivables

Cash

LIABILITIES (SOURCES)

EQUITY

Common Equity

Retained Profit / Loss

LT Liabilities

LT Payables

LT Bank Debts

ST Liabilities

ST Payables

ST Bank Debts


3. Cash Flow statement

+ CF from Operations

+ CF from Investments

= Free CF

+ CF from Financial Operations

= Net Operating CF

(Cash BOP + Net Operating CF = Cash EOP)

EBITDA-/+ Change in W/C- Interest Expense paid- TAX- CAPEX


4. Ratios

Revenue

Profitability

Indebtedness

Liquidity

Activity


It is important to read all ratios not just the most favourite one.

Would you fill in the gaps identically if you were presented the sentences in isolated way?

1.This story is about _______________ .

2.He lived in New York during the summer and usually moved to __________ for the winter season.

3.He used to go shopping to _________________.

4.He did not enjoy it. He would rather _____________________.

5.One day he met _____________________.

6.And they got married and had ______________________________________.


4. Ratios

Revenue: Revenue, Revenue trend

Profitability:

Indebtedness:

Liquidity:

Activity:


4. Ratios

Revenue:

Profitability: GPM, EBITDA, Debt Service Coverage, Personal Costs/GP

Indebtedness:

Liquidity:

Activity:


4. Ratios

Revenue:

Profitability:

Indebtedness: Leverage (Balance Sheet, Debt/EBITDA)

Liquidity:

Activity:


4. Ratios

Revenue:

Profitability:

Indebtedness:

Liquidity: Current Ratio, Available credits / Total Revenue

Activity:


4. Ratios

Revenue:

Profitability:

Indebtedness:

Liquidity:

Activity: Days Receivables, Days Payables, Days Inventory


4. Ratios

Revenue: Revenue, Revenue trend

Profitability: GPM, EBITDA, Debt Service Coverage, Personal Costs/GP

Indebtedness: Leverage (Balance Sheet, Debt/EBITDA)

Liquidity: Current Ratio, Available credits / Total Revenue

Activity: Days Receivables, Days Payables, Days Inventory

coffee break

Snowball Fight

Instructions:

Stand-up

Take two paper snowballs

Fight for 30 seconds by throwing snowballs on people around you.

Pick the two nearest snowballs and unpack.

Choose one term and explain it to other participants in your own words.

III. Case study #1 - “Vodo-topo Kohoutek a syn s.r.o.”

Thank you for your attention.

Radim Vyhná[email protected]

FINANCIAL ANALYSIS Introductory level Radim Vyhnánek senior credit risk analyst Citibank Europe...

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