With this question that I put forward to you, which is how can we distinguish
the increase in receivables, is coming from an increasing sales or
coming from a deterioration of dates of collection?
With this question in mind, we close this first session.
Now, doing a brief recap of this first session of
operation of finance build in a robust business,
what we did is an introduction what we saw what operational finance is all about.
Then we went into trying to understand a case, a specific case that is
Co Polypanel, that is the case we're using through all the sessions.
The first question was clear, is whether we give a credit to this Mr.
Lichstein, that runs a company called Polypanel.
And before jumping into the numbers, we asked the panel in the bank.
And as you remember, there were three people that said in the bank that didn't
have to be clear whether they would give the loan or not,
and there were reasons for the yes, and reasons for the no.
And all of them were right, were correct, but we didn't know exactly.
What was the correct answer?
So to answer that question, we backed up out little bit and said, before looking
into the numbers, let's analyse the business because we need a context.
So with the context, we start analysing the business.
What do they sell?
To whom do they sell?
Who are the clients?
The suppliers?
What is the strategy of the company?
How is the management?
Do we trust this person?
And once we did all this business analysis,
then we started moving into the numbers, and we looked at the P&L.
And as you remember, the P&L were basically four steps, one sales,
gross margin, operational expenses, and return on sales.
And our conclusion there was that the company's profitable,
but it's not a money machine.
Now in the last part that we just saw today, we analyzed a balance sheet.
And in the balance sheet, we said that there are three steps.
The first step is analyzing the structure of one year on how is the asset side and
the liability side.
And we saw that in the asset side, 60% were receivables, 40% were inventory.
That was financed with equity, then with payables and then with credit and
long-term debt, a mix of everything.
And we noted that leverage is pretty high,
which banks don't like although shareholders do.
The third step in the analysis of the balance sheet is to look at
the operational ratios, which is the question that I put you forward and
is the way we would start session two.
See you next week.
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