Complete Summary of the KUL Commercial Sciences Transition Year for the Corporate Finance course by Bert d'Espallier and his colleague. As well as example exercises in the summary! I got a 16/20 by just studying this summary.
Ondernemingsfinanciering
Examens: Enkel uit de lessen, niet uit de boek (50% oefeningen van oude
examens en handboek en 50% inzichtsvragen) 4 meerkeuze, 4 oefeningen, dan
één grote oefening zoals in hoofdstuk 4 en zoniet één van hoofdstuk 5 of 6 + een
case op het einde over actua of een gastspreker.
Gesloten boek maar met formularium en GRM -> Theorie + oefeningen &
meerkeuze
Hoofdstuk 0: The concept of financial value
Financial value is the “sum of discounted cash flows”.
Discounted = what can be earned elsewhere for a similar amount of risk /
the present value of future cash flows
It is not a fixed number, but an estimate.
Wat is de financiële waarde?
“Itsme” neemt Leuvense authenticatie-specialist “NextAuth” over (Oktober
2023) en wil een overnameprijs bepalen.
o Who? Itsme
o What? Alle toekomstige vrije cashflows in NextAuth
o Discount rate? Opportuniteitskost, ze kunnen ook een ander bedrijf
overnemen
Een institutionele investeerder wil participeren in de IPO van Robinhood
(Juli 2021) en wil weten of de uitgifteprijs van USD38 een goede prijs is.
o Who? Institurionele investeerder
o What? Alle toekomstige dividenden van Robinhood
o Discount rate? Opportuniteitskost, dat ze in iets ander investeren
want ze hebben veel opties
Een particuliere belegger overweegt te investeren in de éénjarige
staatsbon gelanceerd door minister Van Peteghem (september 2023) en
wil weten of dit een interessante belegging is.
o Who? Particuliere belegger
o What? De rente van de staatsbon
o Discount rate? Opportuniteitskost, van een spaarboekje of
belegging.
Een vermogensbeheerder overweegt een “call-optie” van BARCO op te
nemen in de financiële portefeuille en wil weten of de prijs op de
secundaire markt (15 500 euro op1/2/2024) een goede prijs is voor dit
product.
o Who? Vermogensbeheerder
o What? De cashflows van de optie op BARCO
o Discount rate? Opportuniteitskost, dat ze in iets anders investeren
(ligt hoger dan een particulier want hebben meer opties)
5. Een financieel analist wil een BUY-HOLD-SELL advies geven over de
huidige marktwaarde van een aandeel BPOST.
o Who? Financieel analist
o What? Toekomstige CF of dividend van BPOST
, o Discount rate? Opportuniteitskost van de klant, wanneer men een
breed publiek heeft is deze lager
6. COLRUYT investeert 90 miljoen euro in een nieuwe vleesfabriek (januari
2017) en wil inschatten wat de financiële waarde van deze investering is.
o Who? Colruyt
o What? Toekomstige CF van de investering
o Discount rate? Opportuniteitskost voor het Risico van de investering
Hoofdstuk 1: Introductie tot corporate finance
Verschillende soorten beslissingen:
Investment decisions = capital budgeting decision = capital expenditures
o purchase/sale of real assets (asset used to produce goods and/or
services)
o tangible vs. intangible assets
Financing decisions
o sale/purchase of financial assets (financial claim to the income
generated by real assets)
o Changes capital structure: debt versus equity
o Includes payout decision: equity repurchases / dividend
SEO: Seasoned equity offering (de eerste keer is IPO, daarna SEO)
Welke beslissingen zijn het belangrijkste?
M&M1: In a perfect world (no tax, no bankruptcy costs, no transaction
costs, efficient markets):
o Financial value of the firm does NOT depend on financing decisions.
o The firm’s capital structure (= leverage) does not influence firm
value.
o Financial value is only created via investment decisions.
Beredenering:
o Shareholders have unlimited access to financial markets and
diversify their portfolio. They will invest ‘elsewhere’ in case their
required return is not met.
, o How the firm’s cash flows are distributed between debt-holders and
equity-holders does NOT influence the required return by the
shareholders, because of their access to outside opportunities.
Wanneer er geen perfecte wereld is:
o return of the shareholders increases with leverage (alleen wanneer
je meer krijgt uit je projecten dan dat je erin moet investeren =
hefboomwerking)
o Capital structure theories & ‘optimal’ leverage
o Optimizing/minimizing the company ‘cost of capital’ (=hurdle rate)
to create financial value for shareholders
Levenscyclus van een bedrijf:
In start-up and growth phase, companies should focus primarily on the
investment decision to increase financial value
In a mature stage, companies start to also optimize/minimize the company
hurdle rate(WACC) to increase financial value. In addition, pressure will
start to build to remunerate shareholders (via dividends and/or equity
repurchases)
In a declining stage, companies should be pre-occupied by distributing
cash back to investors so they can invest elsewhere
Agency theory:
Eigenaars zijn niet de
managers
Managers (agents) vs shareholders (principals)
o Different objectives:
Shareholders want to maximize their financial value
Managers “should” be acting in interest of shareholders but
“may“ want something else
o Different information-set:
Shareholders may not have all inside information, managers
have inside information
o principal-agent relationship
o informational asymmetry
o agency cost
Agency costs are incurred when:
1. Managers do not attempt to maximize firm value
2. Shareholders incur costs to monitor the managers
and constrain their actions.
o Corporate governance needed!
, Legal and Regulatory Requirements (corporate governance
codes)
Performance-based compensation plans
i.e. stock options -> alignment of interests
Board of Directors: key decisions on ‘financial value’
i.e. hiring-firing CEO; M&A decisions; strategic decisions
Active takeover-market: (wanneer een manager het heel
slecht doet zullen ze wel worden overgenomen door een beter
bedrijf)
i.e. lower financial value on financial markets -> easy
take-over target
Het doel van een bedrijf:
Maximaliseer aandeelhouder waarde:
o This means maximizing cash flows while taking into account the
‘opportunity costs of shareholders (expected return of shareholders/
opportunity cost / ‘hurdle rate’)’
=is determined OUTSIDE the company via external
opportunities
Not profit maximalization, winst is geen goed gedefinieerd objectief enkel
cash flows zijn belangrijk.
o Profits can be ‘inflated’ and ‘timed’ because of accounting rules:
i.e. non-cash items/accruals (depreciations, provisions,
impairment,...) affect profit but have no cash consequence
.i.e. profits/losses can be subject to ‘end-of-year adjustments’
Hoofdstuk 2: Financiële algebra
Definities:
o Future Value : Amount to which an investment will grow after
earning interest: OPRENTEN
o Present Value: Value today of a future cash flow: VERDISCONTEREN
o Discount Rate: Interest rate used to compute present values of
future cashflows = r %
o Discount Factor: Present value of a $1 future cash flow
Interesten:
o Simple interest: Future Value = Present value x (1+ r x t)
o Compound interest: Future value = present value x (1+r)^t
Present value = future value x
(1/(1+r)^t)
o Voorbeelden:
What is the future value of 100 euro if interest is compounded
annually at a rate of 7% for 2 years? = 100 x (1+0,07)^2 =
114,49
You have invested 500 euro in a financial product that earns
5% annually. How much will you have in 10 years? 500 x
(1+0,05)^10 = 814,45
What is the present value of 300 euro you get in 6 years when
the annual interest rate is 4%? 300 x (1/(1,04)^6) = 237,09
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