businessmen 31012016

شركة األجيال القادمة لالستشارات

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دورة اتلحيلل املايل الحصاب االامعل

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ضمان الجودة

تضمن الشركة إرجاع كامل الرسوم املدفوعة بدون اسئلة في َحال عدم رضااملشارك في الدورة التدريبية

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FGA GUARANTEE

▸ We guarantee to pay your money back with no questions asked if you are not satisfied at the end of this training session

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السيرة الذاتية▸ West Virginia University بكالوريوس هندسة بترول

▸ Kuwait Maastricht Business ماجستير ادارة اعمال School

الدورة التاسعة الهيئة العامة لالستثمار ▸

مكتب االستثمار الكويتي في لندن - قسم األسهم ▸األوروبية

الهيئة العامة لالستثمار - قسم املساهمات الخاصة ▸

عضو مجلس ادارة صندوق األجيال في املغرب ▸

عضو مجلس ادارة شركة UNITIC في البوسنة▸

▸ Golden Gate Capital مستشار لشركة

مدير عام شركة األجيال القادمة لالستشارات ▸ذ م م

كاتب اسبوعي في القبس االقتصادي ▸

مشارك اسبوعي في قناة العربية االقتصادية▸

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أهداف الدورة

قراءة البيانات املالية ▸

التقييم ومقارنة األداء في الشركات املدرجة والخاصة ▸

التعرف على املخاطر املالية في الشركات الخاصة ▸

التعرف على التعامل مع حالة الصعوبات املالية في الشركات الخاصة▸

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TRAINING SESSION

▸ Training session is divided into the following parts:

▸ Income Statement

▸ Balance Sheet

▸ Statement of Cash Flow

▸ Valuation

▸ Cash flow model

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INCOME STATEMENT

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TRAINING SESSION

▸ Training session is divided into the following parts:

▸ Income Statement

▸ Balance Sheet

▸ Statement of Cash Flow

▸ Valuation

▸ Cash flow model

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INCOME STATEMENT▸ It provides all sales and

expenses in a given period

▸ It is the most manipulated information because of managment discretion

▸ It provides good information about business

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INCOME STATEMENT - COMMON SIZE ANALYSIS

Sales 106 100% 1000COGS (79) 75% 750Gross profit 26 25% 250SGA (20) 19% 190Operating profit 6 6% 60Tax 0 NA NANet profit 6 6% 60

مليون ديناربالفلس

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5 MINUTE BEAK

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INCOME STATEMENT - MARGINS

▸ Margins can be used to compare businesses in the same sector

▸ Margins can be used to compare one business over time

▸ Higher profit margins indicates strength

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INCOME STATEMENT - MARGINS▸ There is a range for

businesses in the same sector

▸ Higher gross margins leads to higher net margins

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INCOME STATEMENT - MARGINS

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INCOME STATEMENT - MARGINS

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INCOME STATEMENT - MARGINS

▸ Higher gross margin leads to higher net margin

▸ Similar businesses should have similar margins

▸ Margins show managment skills and abilities

▸ Margins are also a function of industry wide effects

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INCOME STATEMENT - MARGINS

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▸ Transportations and retail are low margin businesses

▸ Tech, tobacco, and pharmaceutical are high margin businesses

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INCOME STATEMENT-ISSUES

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▸ Managment have discretion on when to book earnings

▸ Revenue recognition

▸ Risk and rewards transfer

▸ Percentage of completion

▸ Loan allowances at banks

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INCOME STATEMENT-CONCLUSION

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▸ Income statement is used to estimate reasonable business profit in the future

▸ Certainty and quality of profit are main skills that makes a difference

▸ Different people arrive at different numbers

▸ Average intelligent investor can arrive at a reasonable range

DAY ONE CASES

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INCOME STATEMENT - CASES

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زين

طيران الجزيرة

ياكو الطبية

املجموعة البترولية

BALANCE SHEET

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TRAINING SESSION

▸ Training session is divided into the following parts:

▸ Income Statement

▸ Balance Sheet

▸ Statement of Cash Flow

▸ Valuation

▸ Cash flow model

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BALANCE SHEET-ASSETS

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▸ It shows assets like cash, accounts receivables, inventory, equipment, and land

▸ It also shows accounts payable, bank debt, and employee related liabilities

▸ At the bottom, you can see capita and shareholder equity

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BALANCE SHEET-ACCOUNTS RECEIVABLES

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▸ Accounts receivables (AR) are the most major source of risks for small businesses

▸ Inexperienced CEO has no clear strategy regarding AR

▸ A business can be focusing on sales but not cash collections

▸ Even worse, employees could be playing the system

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BALANCE SHEET-ACCOUNTS RECEIVABLES

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▸ Every business should have a clear credit and collection policy

▸ There should be a person in charge of collections

▸ All credit sales has to be linked to employees who made the sales

▸ No employee should be paid before his collections are done

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BALANCE SHEET-DAYS RECEIVABLES

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▸ Days receivables is a common used number to monitor receivables

▸ Days receivables = Accounts receivables/sales *365

▸ This number should be compares with competitors

▸ Bigger number means worse collections

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BALANCE SHEET

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▸ The aging of receivables is a good control documents and should be reviewed daily in case of distressed situations

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BALANCE SHEET-ASSETS

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▸ Another major focus of balance sheet is reducing assets

▸ Every asset should be scrutinized and should be sold immediately if there is no economic benefits

▸ Most cash is invested in larger inventory, unrelated real estate, listed stocks, or funds

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BALANCE SHEET-DAYS INVENTORY

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▸ Days inventory is a common used number to monitor inventory level

▸ Days inventory = inventory/cost of goods sold *365

▸ This number should be compares with competitors

▸ Bigger number means less cash in the bank

5 MINUTE BREAK

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BALANCE SHEET-LIABILITIES

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▸ Bank debt and accounts payables are other sources of capital that can be useful to the business

▸ In general, trade or accounts payables are best source of capital to any business

▸ Bank debt is another source of risks

▸ Most business distress comes from having more debt than needed

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BALANCE SHEET- BANK DEBT

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▸ Relationships with banks should be closely monitored

▸ Normal debt level varies by businesses

▸ Most transportation, rental, real estate companies use more debt than other sectors

▸ In US buyout, debt level should not be more than 6x cash flow

▸ In public companies, debt is at 3x cash flow

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BALANCE SHEET- BANK DEBT

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▸ Relationships with banks should be closely monitored

▸ Normal debt level varies by businesses

▸ Most transportation, rental, real estate companies use more debt than other sectors

▸ Most tech companies don't carry debt

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BALANCE SHEET- BANK DEBT

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▸ What is the appropriate debt level?

▸ Most US buyout use 6x cash flow

▸ Most public companies use 3x cash flow

▸ Debt should be adjusted reflecting business risks

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BALANCE SHEET

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BALANCE SHEET ACCOUNTS PAYABLES

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▸ Accounts payables is what you owe suppliers

▸ This is the best source of financing since it is usually inexpensive and can be delayed without legal risks

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BALANCE SHEET-DAYS PAYABLES

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▸ Days payables is a common used number to monitor receivables

▸ Days payables = Accounts payables/cost of goods sold *365

▸ This number should be compares with competitors

▸ Bigger number means stronger business

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BALANCE SHEET- CASH CYCLE

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▸ Cash cycle shows how cash is used inside a business

▸ This is most comprehensive figure to improve cash efficiency

▸ Cash days= days payables - days inventory - days receivables

▸ Smaller number means more efficient business model

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BALANCE SHEET- CASH CYCLE

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Kuwait PortlandPayables 23m 17mCost of goods sold 60m 72mDays payables 140 days 86 daysInventory 24m 8mCost of goods sold 60m 72mDays inventory 146 days 41 daysRecievables 16m 19mSales 83m 83mDays recievables 70 days 84 daysCash cycle days 76 days 38 days

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BALANCE SHEET- CONCLUSION

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▸ Balance sheet shows capital required for business

▸ It also shows level of debt and potential risks

DAY TWO CASES

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BALANCE SHEET- CASES

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قطر لالستثمار

املستثمرون

السالم

CASH FLOW STATEMENT

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TRAINING SESSION

▸ Training session is divided into the following parts:

▸ Income Statement

▸ Balance Sheet

▸ Statement of Cash Flow

▸ Valuation

▸ Cash flow model

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CASH FLOW STATEMENT

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▸ Statement of cash flows is where we can check income statement numbers

▸ It also uncovers potential problems with business

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CASH FLOW STATEMENT

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▸ Cash flow Statement is divided into 3 segments:

▸ Cash flow from operations CFO

▸ Cash flow from investing CFI

▸ Cash flow from financing CFF

▸ The sum of previous figures changes cash at the bank

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CASH FLOW STATEMENT

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▸ Cash flow from operations is calculated by adjusting net income figure for:

A. Non cash items like depreciation

B. Changes in working capital like A/R, inventory, A/P

C. Non operating items like gain from sale of assets

D. Interest and tax

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CASH FLOW STATEMENT

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▸ Cash flow from investing activities focuses on cash related to investing or selling of assets

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CASH FLOW STATEMENT

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▸ Cash flow from financing accounts for any cash paid to banks and investors

▸ Positive cash flow means business operations are in good shape

5 MINUTE BREAK

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CASH FLOW STATEMENT- CONCLUSION

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▸ Cash flow Statement is useful to outside investors and managment

▸ This report very hard to manipulate

DAY THREE CASES

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CASH FLOW STATEMENT- CASES

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امريكانا

الزجاج

VALUATION

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TRAINING SESSION

▸ Training session is divided into the following parts:

▸ Income Statement

▸ Balance Sheet

▸ Statement of Cash Flow

▸ Valuation

▸ Cash flow model

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VALUATION- P/E RATIO

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▸ P/E ratio is most widely used comparison figure

▸ P/E is price of a share divided by earning per share

▸ Earning per share is net profit divided by total number of shares

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VALUATION- P/E RATIO

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VALUATION

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▸ P/E ratio is like pay back in years

▸ P/E ratio of 10 means you will receive your money back after 10 years

▸ You can invert the ratio (E/P) to get earning yield

▸ Earning yield is like real estate income ratio

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VALUATION- P/BV

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▸ Book value is what you get after paying debt and selling assets

▸ Paying debt doesn't normally happen but selling the business or its shares is the norm

▸ It is like buying a financed car and calculating net value

▸ Such a ratio is useful for comparing financial institutions

▸ It's a historical ratio and usually lower than market values

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VALUATION- P/BV

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VALUATION- P/BV

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VALUATION- P/BV

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VALUATION- EV/EBITDA

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▸ EV/EBITDA is most commonly used metric for buying companies

▸ EV= debt + market capitalization

▸ EBITDA is cash operating earnings

▸ EBITDA is used to remove non operating profit

▸ It is also used to calculate ability to pay down debt used in acquisitions

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VALUATION- EV/EBITDA

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5 MINUTE BREAK

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VALUATION- DIVIDEND YIELD

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▸ Dividend yield is money paid to shareholders

▸ In Kuwait, it is mostly reported as percentage of capital per share

▸ 17% = 17 files

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VALUATION

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DAY FOUR CASES

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VALUATION CASES- CEMENT COMPANIES

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Kuwait PortlandShare price 400 files 1000 filesMarket cap KD300m KD100mDebt 90m 0mSales 83m 83mEBITDA 20m 12mNet income 17m 8mDividend 13m 0.3mP/E 18x 12xEV/EBITDA 20x 8xEarning yield 6% 8%Dividend yield 4% 0.3%

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VALUATION CASES- GAMING COMPANIES

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EA ATVIShare price 64 35Market cap 20 25Debt 0 4.3Sales 4.5 4.4EBITDA 0.9 1Net income 0.9 0.8Dividend -- 0.1P/E 26x 24xEV/EBITDA 22x 29xEarning yield 4% 4%Dividend yield -- 0.7%

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VALUATION CASES- OIL COMPANIES

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XOM CVXShare price 79 85Market cap 314 154Debt 12 24Sales 394 200EBITDA 34 24Net income 32 19P/E 17x 19xEV/EBITDA 10x 7xEarning yield 6% 5%Dividend yield 3.7% 5.0%

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VALUATION CASES- OIL COMPANIES

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XOM CVX

Share price 79 85

Market cap 314 154

Debt 12 24

Reserves 25 11NPV 176 155

EV/NPV 1.8x 1.0x

Price per proven barrel 13 16

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VALUATION CASES

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صفقة فيفا

Yahoo

واتسب

CASH FLOW MODEL

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TRAINING SESSION

▸ Training session is divided into the following parts:

▸ Income Statement

▸ Balance Sheet

▸ Statement of Cash Flow

▸ Valuation

▸ Cash flow model

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CASH FLOW MODEL

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▸ Every business should have a cash flow model prepared

▸ This is an internal document that shows how cash is flowing inside a business

▸ It also provides good idea about cash needs

▸ This sheet is easy to prepare but hard to maintain

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CASH FLOW MODEL

▸ Every business should keep a cash flow spread sheet

▸ It shows weekly cash flow projections

▸ Accuracy of input is critical

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CASH FLOW MODEL

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▸ Cash flow model is shown in this example

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CASH FLOW MODEL

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▸ Cash balance at the bottom of the table should be transferred to the following week

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CASH FLOW MODEL

▸ Medium size businesses use accountants as CFOs

▸ Most accountants report after the fact and can't project into the future

▸ Most accountants are paid little money and their goal is to avoid risks and keep their job

▸ During difficult times, CFOs are needed to take good risks and make critical judgments

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CASH FLOW MODEL

▸ Upper part of cash flow model focuses on cash coming to business

▸ Focus should be on customers who pay regularly

▸ Late customers will cause less cash to be coming to business

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CASH FLOW MODEL

▸ Bottom part of cash flow model focuses on payments

▸ There has to be initiatives to reduce cash going out

▸ Invoice payment cycles can be increased from weekly to monthly

▸ Accounts payables can be extended to 60, 90, or 120 days

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CASH FLOW MODEL

▸ Accounts payables can be discounted to be paid to insisting customers

▸ A key issues is keeping a clear payment schedule and paying as promised

▸ Banks debt can provide a better installment that are more appropriate for business

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5 MINUTE BREAK

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DAY FIVE CASES

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CASH FLOW MODEL

6 مقاالت الشركات املتعثرة▸

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APPENDIX

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APPENDIX - PSYCHOLOGY SIDE OF RESTRUCTURING

▸ Failure and success depend on individual behaviors inside and outside a firm

▸ If insiders lose trust, it's very hard to gain it back

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APPENDIX - PSYCHOLOGY SIDE OF RESTRUCTURING

▸ Food distribution accountant example

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