In this work we explore the effect of book value leverage upon some financial indexes, such as real growth, payment terms from suppliers and gross and operating margins. We explore if there is statistical evidence on the influence of the book value leverage level in the financial distress or...

Unquestionably, before the advent of the personal computer, modeling the impacts of inflation in investment appraisal was an enormous task. Currently, with the widespread availability of personal computers, conducting investment appraisal by constructing financial statements with nominal prices...

For the practitioner, making sense of the bewildering number of theories on the cost of capital must be a truly challenging and daunting task. In a perfect world without taxes, the cost of capital formula for a finite stream of free cash flows, with debt and equity financing, is elegant, simple...

The purpose of this paper is twofold: the first purpose is to tell a naive history of an experience in constructing knowledge. In this first part I tell how I approached the process to solve the inconsistency between the net present value, NPV, the internal rate of return, IRR and the...

Using the model proposed by Velez-Pareja (2006) and assuming straight line depreciation we examine the conditions to assure a constant growth rate in a growingperpetuity. Our findings are that in practical terms for a growing perpetuity there are two options: either depreciation life is one year...

Textbooks on corporate finance and budgeting and forecasting recommend 'closing' the financial statements using what is known as a plug. A plug is a formula to match the Balance Sheet (BS) using differences in some items listed in it in such a way that the accounting equation holds. This is...

This teaching note shows the relationship between levered and unlevered betas and the general formulation for the cost of equity. It also shows, step by step, the procedure to estimate betas from data found in the stock market.It shows well known procedures for estimating betas: correlation...

This is a teaching material for a module of Financial analysis at Universidad Tecnológica de Bolivar. The educational material was developed with Professor Ricardo Davila from Universidad Javeriana, Bogota, Colombia. The written material has been modified several times using the feedback from...

This is a teaching material for a module of Financial analysis at Universidad Tecnológica de Bolivar. The educational material was developed with Professor Ricardo Davila from Universidad Javeriana, Bogota, Colombia. The written material has been modified several times using the feedback from...

This is a teaching material for a module of Financial Analysis at Universidad Tecnológica de Bolivar. The educational material was developed with Professor Ricardo Davila from Universidad Javeriana, Bogota, Colombia. The written material has been modified several times using the feedback from...