Samlat viktigt Flashcards
5 phases that characterize Benchmarking
- Identify the strategic objectives
- Performance orientation
- Process orientation
- Sample selection
- Leader-, sector- or internal benchmarking
- Involvement modality
- Unconsious
- Consious
- Performances of choice for the comparison
- Definition of scope
- Definition of the measurement system
- Data correction
What is Consolidated Financial Statement and different theories?
The financial statement of a group of companies.
- Proprietary theory - Views the company as an extension of its owners.
Con: Does not show details on invested capital and minority interest.
- Entity theory - Views the group as a seperate economic entity
Pro: CFS is complete, minority interest is shown
Con: Result of the group can be overestimated.
- Parent company theory - Adopts the view point of parent company shareholders.
Parent dont own assets or has responsability for liabilities, but can control them.
Operational budget:
- Revenues budget
Budgetes the revenues, based on for example historical data, season etc. - Production budget
Budgets quantity and volumes needed for the production.
Ex. Do we need to outsource?
- Cost of goods sold
- Direct material consumption
- Direct labor
- Manufacturing overhead
- Period costs budget (This one has Incremental approach and Zero based budget approach)
- Selling
- Marketing
- Administrative
- General costs
- R&D
What 3 budgets is included in Master Budget
Operation budget
Capital expenditure budget
Financial budget
Financial budgets
Includes:
The budget cash flow statement
Capital expenditure budget
Outlines anticipated capital exependiture:
Example buying equipment or building a new store.
Exemplify: Financial planning - Long term
- Bank loan / Syndicated bank loan
- Corporate bonds
- Leasing
Exemplify: Financial planning - short term
- Bridge/bank/syndicated bank loan
- Lines of credit
- Factoring
Tell me about corporate bonds
Securitys that corporations can sell on the market, meaning individuals or corporation can lend money in exchange of interest or just repayment over time.
Hybrid bonds: Mix of equity and dept, can swap from bond- to share-holder
Zero coupon: The bond pays no coupon
Coupon: Bond pays coupons over time. Rate can be fixed or floating.
Pros:
Priority in case of default
Often higher interest rate
If you cant take bank loan this is an option.
Two categories of leasing
Operating leasing - Shorter period than life of asset
Financial leasing - Generally last whole asset life
What is Financial planning?
Choosing the best source of financing for the company
What is Value based indicators?
VBI aim at controlling enterprises, measuring the creation of value and its risks.
Four type of indicators:
- Direct measurement of present value
- Indirect measurement of present value
- Relative valuation
- Value based proxies
- Risk value indicators
Value based proxies
- Total Business Return
TBR = V(1) + Net Cash Flow (1) - Market Value Added
MVA = Market value - Invested capital - Total shareholder return
TSR = (Variance in market value + Dividends) / Initial market value
Risk value indicators
- Value at risk (VAR)
- Economic capital
- Risk-adjusted Return indicators
- RORAC, RAROC, RARORAC
Main steps in Relative valuation?
Main steps:
- Defining comparable companies ( Should be companies which are competing on our same values )
- Defining possible multiples (Convert asset values into standardised values. Absolute prices cannot be compared)
- Analysing multiples. To choose the best multiples.
- Applying multiples.
Relative valuation - Possible multiples
Asset side:
- EV/EBIT
- EV/EBITDA
- EV/FCFF
- EV/SALES
Equity side:
- P/E
- PEG
- P/FCFE
- P/BV
What is Value drivers?
Value drivers refer to indicators which provide early signals of value creation.
Three categories:
- Non financial performance indicators
- Non financial resource state
- Drivers of risk
Value drivers: Non financial performance indicator - Time
Internal (Time for performing specific processes):
- Highlighting non value added activities
- Throughput time
- Time Efficiency
External :
- Delivery time
- Time to market
Value drivers: Non financial performance indicator - Quality
External quality: Products
- Quality of design
- How the product meet needs and wants
- Customer responsiveness
- Capability of product to respond to needs and wants of customers
- Conformance quality
- Performance of a product/service relative to its design and product specifications
Internal quality: Process
- Measure the failure in the production and the delivery process
How to map performances and customer satisfaction to understand how we performe?
Use a map consisting: Concentrate here Keep up the good work Low priority Possible overkill
Value drivers: Non financial performance indicator - Productivity
Productivity = Output / Input
Measuring outputs:
Production type / Output indicator
One-product / Quantity
Different, but homogeneous products / Quantity with physical weights
Diversified products / “Standard” sales
Measuring inputs:
Partial productivity = Output is confronted against each production factor
Global productivity = Output is confronted against a weighted average of production factors
Value drivers: Non financial performance indicator - Flexibility
Capability of a company of answering to changes with limited cost and time.
Different types:
Entity of change = Small, Range, Large
Nature of change = Quality (Product, Production, Operation), Quantity (Volume, Mix, Expansion)
Value drivers: Non financial performance indicator - Environment and Society - Sustainability
Cost drivers: Energy consumptions, fines
Revenue drivers: CO2 emissions, Reputational effect
GRI Standard (Global Reporting Initiative)
KPI examples: Use of materials, energy consumption
Carbon footprint
Value drivers: Non Financial measure - Resource Indicators
Aims at capturing potentialities for enterprises to innovate and grow
Cover both tangible and intangible assets
Four types of resources:
- Financial
- Technological
- Human and organizational
- Image and reputation
Three types of measures:
- Quality
- Quantity
- Accessibility
