There are many different ways to calculate the Weighted Average Cost of Capital (WACC) and for the beginner the plethora of possibilities may be very confusing. We present a general framework for classifying the WACCs that are applied to the FCF and the CCF. For the moment, we avoid...

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...

Spanish Abstract: La mayoriacute;a de los textos de finanzas corporativas y los analistas presentan el caacute;lculo del Costo Promedio Ponderado de Capital CPPC (tambieacute;n conocido como WACC) como independiente del Flujo de caja libre.Es una praacute;ctica comuacute;n que los analistas calculen...

La versioacute;n espantilde;ola de este artiacute;culo se puede encontrar en lt;a href='http://ssrn.com/abstract=279460'gt;http://ssrn.com/abstract=279460lt;/agt;Most finance textbooks (See Benninga and Sarig, 1997, Brealey, Myers and Marcus, 1996, Copeland, Koller and Murrin, 1994, Damodaran, 1996,...

In this short teaching note I explain why we subtract the change in working capital from the proper item (Earnings before interest and taxes (EBIT) or Net income) in the Income Statement. I show in detail how departing from the sales revenues and the cost of goods sold we have to subtract the...

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...

Spanish Abstract: En esta nota pedagoacute;gica presento algunas sugerencias e ideas que puede ser uacute;til tener en cuenta cuando se trata de pronosticar estados financieros a partir de datos histoacute;ricos. Las ideas que se presentan son el resultado de la experiencia de aconsejar a los...

En esta nota se ofrece, un sencillo resumen de los principales meacute;todos de valoracioacute;n de intangibles. Incluye la presentacioacute;n de conceptos baacute;sicos de valor del dinero en el tiempo y de contabilidad. Asiacute; mismo, se incluye una breve aproximacioacute;n al enfoque de...

This is a course material (slides in pdf format) for the chapter Financial Analysis and Control Financial Ratio Analysis already in SSRN. The chapter is originally in Spanish. In these slides we present a detailed explanation of different financial ratios commonly used in financial management....

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 make mistakes. This is especially relevant when we construct a financial model without plugs and without circularity.In...