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...

Debt financing with subsidizes interest rate has a multidimensional impact on the firm. Value of the levered equity, value of the debt and overall firm value will be different of those values with debt financing at market rate. Subsidized interest rate on debt does not create any additional cash...

Typical textbooks on corporate finance and forecasting and budgeting recommend “closing” and matching the financial statements using what is known as a plug. A plug is a formula to match the Balance Sheet using differences in some items listed in it in such a way that the accounting equation...

In this teaching note we show that using the findings of Tham and Velez-Pareja 2002, for finite cash flows, Ke and hence WACC depend on the discount rate that is used to value the tax shield, TS and as expected, Ke and WACC are not constant with Kd as the discount rate for the tax shield, even...

When forecasting financial statements care has to be taken to construct a consistent and correct model. This is not an easy task. Even the most experienced expert in modeling makes mistakes. This is especially relevant when we construct a financial model without plugs and without circularity. In...

Todo el mundo usa los ahorros en impuestos, AI o escudos fiscales cuando se calcula el Costo Promedio Ponderado de Capital (CPPC) en inglés Weighted Average Cost of Capital (WACC). Esta formula de los libros de texto incluye el AI cuando se introduce el factor (1-T) que afecta la contribución...

En este trabajo evaluamos la proyección de la tasa de cambio (peso colombiano/dólar) con datos de 1995 a 2005 de Colombia a través del modelo de Tasa de Cambio de Paridad de Poder Adquisitivo (TCPPA). En primer lugar encontramos que las proyecciones realizadas validan el uso de este modelo...

Everybody uses tax shields when calculating the Weighted Average Cost of Capital (WACC). The textbook formula includes the tax shield with the (1-T) factor affecting the contribution of debt to the WACC. Tax shields are a strange mix of accounting and accrual related to WACC that relies on...

In this note we correct the findings reported by Vélez-Pareja and Tham (2005). Although perpetuities are somewhat artificial in the sense that in practice they do not exist, they are relevant because no matter how detailed and complex a forecasted financial plan for a firm or project could be,...

Usualmente los textos de finanzas presentan por lo menos un capítulo sobre análisis financiero, entendido como análisis de razones financieras. Se enseñan muchos cursos en análisis financiero y se gasta una enorme cantidad de tiempo en cómo calcular las razones financieras basados en...