This is a course material (slides in pdf format) for the chapter Financial Analysis and Control Financial Ratio Analysis already in SSRN. In these slides I present a detailed explanation of different financial ratios commonly used in financial management. We introduce some examples in the slides...

En esta nota se hace un breve repaso de las principales estadísticas de las firmas no transadas en bolsa tanto en los Estados Unidos como en Colombia como un ejemplo de un Mercado emergente o en desarrollo. Se presentan algunas alternativas para calcular el costo del patrimonio o capital propio...

The paper introduces a new financial metric for managerial performance evaluation, Value Added to Invested Capital (VAIC), with the cost of unlevered equity as a hurdle rate to calculate the capital charge rather than the widely accepted WACC. VAIC preserves all positive features of the...

This paper shows how to proceed to find the optimal capital structure and value with period-to-period constant and variable leverage, when the discount rate for tax shields is Ke, the cost of levered equity. Numerical procedures and recursive closed-form non-circular expressions for the...

Business economics does not provide any methodology for appraising strategic investments, relying on informal approaches. Conversely, financial economics offers us plenty of sophisticated mathematical models unsuitable for applications and based on unrealistic assumptions. This paper presents an...

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...

The internal rate of return (IRR) is a widely used benchmark for assessing the reliability of the accounting rate of return (ROA) as a measure of economic profitability. We turn this reasoning process on its head by demonstrating that a suitable (weighted average) aggregation of ROAs better...

La mayoría de los libros de finanzas (Véase Benninga y Sarig, 1997, Brealey, Myers y Marcus, 1996, Copeland, Koller y Murrin, 1994, Damodaran, 1996, Gallagher y Andrew, 2000, Van Horne, 1998, Vélez, 1998, Weston, y Copeland, 1992) estipulan que el costo promedio de capital (CPC) se calcula...

The recent notion of Average Internal Rate of Return (AIRR) [Magni 2010, The Engineering Economist, 55(2), 150-180] completely solves the long-standing problem of the internal rate of return (IRR). While the AIRR is a return measure, this paper presents a cash-flow measure, namely the ratio of...