[MUSIC] Now you can see this is what we call sensitivity analysis. Which is, let's change one parameter, in this case gross margin, from 25, 21, to 23, to 25 to see how the different elements in the P and L and the balance sheets change. Now, we're doing these for gross margin but we could do it for something else, for example, for OPEX. Now, instead of changing margin, we change OPEX. Gross margin stays the same, but OPEX changes. Let's see again the same situation now that you're familiar with these three tables that I showed, I'm going to show you exactly the same Opex was 19% of sales if you remember? And this is the situation, the bank mark situation, what happens if Opex go down to 17%? We manage to squeeze and get more efficiency and optimize roots, and then you know be able to work with the same workers with much more sales or whatever it takes. It turns out that if OPEX go down two percent, we are in a very much better situation. ROS 3.2 to 3.7, and again the situation is pretty similar to an increase in the margin as we saw before. Higher ROS, lower line of credit, NFO constant and working capital much bigger. I imagine we have to buy a new truck, or we have to fires some employee or something that would drive OPEX up. If we drive OPEX up instead of 19 to 21, it turns out that again we are in a ROS that is almost, so we have to control OPEX very well, a change of 1-2% in the OPEX drives our results to almost zero. And the same happens with, as I said before, with NFO, ROS, working capital and credit. Margin OPEX, what happens if interest rates go up? This is very interesting, we haven't talked much about that. We have taken for granted that the bank ask for 6%. 6% it's okay, but imagine that we are on the situation of more uncertainty. Countries like Brazil, Venezuela, and many countries that have more uncertainty as you are aware, they tend to charged higher interest rates, 10, 15, 20, 25%, right? So, what would happen if we are charged a lower interest rate? Well, if with 6% you see the line of financial results that is 35, 41, 48. If we are charged 3%, that line is going to be much lower. Which means that we going to have better loss, which means means we're going to have better working capital and lower need of credit. On the other hand, if interest rates go to 12%, you see again loss falls to the bottom and then need of credit goes up precisely because you have to pay even with the credit the interests. If Mr. Lichstein's wife becomes ill, and you have to pay dividends, what happens is that instead of reinvesting your own profit in the company, you're taking the profit away to give out as dividends. So equity doesn't grow. So, its clear that with a dividend policy of zero percent. You'll reinvest all the profits. But if you do, a dividend policy of 50%, you see the [INAUDIBLE] doesn't grow that fast, and then working capital stays a little lower. And if you give out dividends of 100%, then the [INAUDIBLE] doesn't grow that much, and then actually the need of credit is going much much higher as you can see here. Need of credit, you see, it goes up to a thousand. And now, in terms of operational ratios, we already saw that, right? We see what happens. If you change the operational ratios, you're going to change the NFO, which is something that we haven't change so far, right? In this case, that was the benchmark where NFO is 20% of sales, because in the bottom line NFO is 730 and goes to 1141, right? Now, the level of the NFO is going to determine how much credit we need. So, if the NFO, if we were able to, for example keep the base of payable up, but then lower down the base of collection and lower down the base of inventory, we would be in a situation for example of 15% of sales. If NFO is 15% of sales, that means that we're going to need much less credit, because in this case we're going to have much less receivables and much less inventory. I guess, I'm going now a little quickly, but now that you got the idea, now you are, you are getting used to how we understand this things. Now if instead of 15%, the ROS is 25% of sales, then we're in a situation where you need more and more credit much more than before, right? Finally, what if we don't grow that much, or we grow more than what we are expecting? Well, we can tell you growth 25% is what we expected. With a growth of 5% only, there is no explosion of the credit as you can see here. The explosion of the credit as we saw before it was because the company was growing too much, with 5%, it's okay. Whereas with the growth of 35% there is even a higher explosion of one house. Now you can see that you can tweak different things to understand the sensitivity of the financial statements to different things. So by looking at those numbers, we're able to identify what would happen if certain things occur while we operate in this company. So let's move now onto the following part, in which we would understand what is an example of sustainable growth. [MUSIC]
