Week 1

Question 1

What is the balance sheet perspective on assets?

Answer 1

Assets (capital invested) should generate returns that exceed cost of financing them (opportunity cost of capital)

Question 2

Name at least 2 common ratios and how to calculate them.

Answer 2

1. ROE = NI / equity
2. ROC = EBIT / capital invested
3. ROA = NI / total assets
4. return on total assets = EBIT / assets

Question 3

Name possible inflows and outflows of the Operating Activities cash flow statement

Answer 3

inflows: sales of goods / services.

outflow: purchase costs of supplies, SGA (selling, general and administrative expenses) & tax expense

Question 4

Name possible inflows and outflows of the Investing Activities cash flow statement

Answer 4

inflow: sales of fixed assets, sales of long-term financial assets, interest and dividend income, loans made

outflow: capex, long-term financial investments

Question 5

Name possible inflows and outflows of the Financing Activities cash flow statement

Answer 5

inflow: stock and bond issuance, long-short term borrowings

outflow: stock and bond repurchase, repayment of debt, interest payments, dividend payment

Question 6

Give the formula of WACC

Answer 6

WACC = (E/E+D) * Ke + (D/E+D) * Kd * (1 - t)

Question 7

Give the 3 steps to integrated ESG in the DCF

Answer 7

1. Identify material issues
2. Asses how the company could be affected by material issues (relative to peers)
3. Will the firm obtain competitive (dis)advantage from its performance on material issues? –> adjust DCF

Question 8

Name 3 value drivers (VDA)

Answer 8

Sales, margins and capital (cost of capital & the use of capital (capex, working capital))