Gaodun slidescorporate finance

Introduction of the course S S S Corporate Finance S Weight: 5%~15% P A S E S S S C S S E S S F R I I D S S A F F S S S S Q S S SS7: Corporate Finance SS8: Financing and Control Issues E S A P M I W P W Summary Ø E • 17 Evaluate Expansion & Replacement Projects 16 T • Ø C • Session 400-600-8011 cfa@gaodun.cn http://finance.gaodun.cn Preface Evaluate Capital Projects C B Ø O NPV NPV  C B A IRR C Ft n  t0 1  r  n  t t0 C Ft 1  IR R  t N P V   C F0   Ø CF CF n  t 1 C Ft 1  r  t  C FT N O 1  r  n I Ø CF • F Ø CFTNO Evaluate Capital Projects I O Ø O Evaluate Capital Projects D FCIN NWCI S TS B A A O Ø CF S C D T • FCI • S • NWCI • C • S • D • T • T • B 400-600-8011 cfa@gaodun.cn C D CF F S C D T TD http://finance.gaodun.cn Evaluate Capital Projects T Y Ø TNOCF S • S • NWCI • T • BT A T Example 1: Evaluate Expansion Project N NWCI C TS T F D Ø E BT T Ø S Ø P Ø E Example 1: Evaluate Expansion Project Example 1: Evaluate Expansion Project Ø A S Ø O S C I FCIN NWCI S C F TS B Ø I Ø D Ø E Ø P C Ø CF NPV IRR S C Ø TNOCF S 400-600-8011 cfa@gaodun.cn T T TD NWCI TS T BT http://finance.gaodun.cn Example 1: Evaluate Expansion Project S S C I PV NPV Example 2: Evaluate Replacement Project IRR CF CF NPV N P V   C F0  IRR IRR R D R C Ft n  t 1 1  r  t  C FT N O 1  r  n Ø I NPV NPV T IRR W Example 2: Evaluate Replacement Project Example 2: Evaluate Replacement Project S S Ø O S C FCI I NWCI C S TS F B S C NPV Ø N P V  540, 000  Ø IR R 10  t 1 Ø CF S C D Ø TNOCF S T T NWCI D TS T IRR 102, 000 150, 000   $ 3, t  % Ø D A Ø R NPV IRR BT 400-600-8011 cfa@gaodun.cn http://finance.gaodun.cn Summary Ø I Evaluate Capital Projects Ø C • NPV IRR T ü S ü Ø E Ø C Ø E • Evaluate Capital Projects E M Ø L C • E Evaluate Capital Projects P M L F U L E A S P U C R Ø C L CF Ø U Ø E • A A A A PI   NPV PMT 400-600-8011 cfa@gaodun.cn PI NPV In itia l In v e s tm e n t http://finance.gaodun.cn Example 3: Evaluate Projects Under Capital Rationing Evaluate Capital Projects Ø O E C I P R I T B • S C • F D • F O • S NPV • M A P P P P E H T O Ø T • P T NPV O P O O O Ø E NPV B C E O N Risk Analysis of Capital Investments Risk Analysis of Capital Investments S M A M Ø S A T R A R M A • • NPV Ø R U CAPM SML ri  R F   i [ E ( R M )  R F ] A • • N PROJECT NOT • S Ø D Ø S Ø M O Ø C C S PROJECT WACC • A NPV 400-600-8011 cfa@gaodun.cn http://finance.gaodun.cn Factors That Affect Evaluation E D Ø NPV M Factors That Affect Evaluation A E A CF S C • W L A Ø T S • I T TD Ø H TD • R • D • R CF NPV Ø A Factors That Affect Evaluation Factors That Affect Evaluation C C C B P Ø N Ø O Ø M Ø N B P Ø S Ø P Ø B Ø U C Ø F EPS Ø H IRR Ø B 400-600-8011 cfa@gaodun.cn http://finance.gaodun.cn Example : Compute Economic Income Other Income Measures E I VS A Ø O I Ø A Ø E I C E D B E Ø A E E D Ø C C C I M M A V V B E I B B T C • Y NPV • Y V V I E • Y B e g in n in g M V = Example : Compute Economic Income PV E B Y ,0 0 ,0 0 ,0 0    $ ,1 1  1  1 3 Other Valuation Models CF Y Y P Ø U MV E F MV C N C Ø EP NOPAT MV A CF E I E E ROR B MV I • • WACC NOPAT EBIT WACC WACC × C Ø M MVA  MVA   t 1 M 400-600-8011 cfa@gaodun.cn 1  E Pt W ACC  NPV t http://finance.gaodun.cn Other Valuation Models Other Valuation Models R C Ø F Ø F Ø RI NI • NI • V B B A ×   t1 R It   re  t • CF • CF Summary of Capital Budgeting Summary W Ø I L U W M Ø C Ø C • • B M ü Ø S • L E B NPV  S ü F Ø R • F • O Ø E • 400-600-8011 cfa@gaodun.cn http://finance.gaodun.cn Preface C Capital Structure S T Ø E rw M M Ø E O a c c  D    V • D • V D E E  ) re  rd (1  t )  ( V  E • • Ø D Theory M D Ø O Theory M A M Ø H M Ø MM P • Ø P VL T I VU T Ø I Ø MM P • Ø N T Ø I 400-600-8011 cfa@gaodun.cn II re  r0  ( r0  rd ) ( D ) E http://finance.gaodun.cn Preface C Corporate Governance M G O Ø T Ø D Ø T C A E C G S Ø D Ø C Ø I Ø F Ø C Corporate Governance Corporate Governance M A B F R Ø A 400-600-8011 cfa@gaodun.cn • M • D http://finance.gaodun.cn Corporate Governance B D H Corporate Governance R A A Ø E Ø C Ø E Ø I Ø E B CEO Ø Q Ø E Ø A Ø H Ø A Ø E Ø M Ø S Ø A Ø A Corporate Governance Corporate Governance A A A B A B Ø S Ø N • Ø C • Ø U • Ø D • Ø I • Ø R • • 400-600-8011 cfa@gaodun.cn http://finance.gaodun.cn Corporate Governance E S Corporate Governance G R E V I Ø L Ø A Ø L Ø A Ø R Ø L Ø O Ø S P W S Ø F Summary of Corporate Governance Summary K Ø I Ø P Ø C Ø M Ø A • M • A • A Ø H Ø E Ø P • 400-600-8011 cfa@gaodun.cn http://finance.gaodun.cn Preface Introduction of Mergers & Acquisitions M A Ø C T Ø C • M A • Ø E Ø I M A Ø E EPS EPS Mergers and Acquisitions Mergers and Acquisitions C Ø S M A T 400-600-8011 cfa@gaodun.cn http://finance.gaodun.cn Mergers and Acquisitions Mergers and Acquisitions C C Ø S M T Ø C A O Company A (Bidder) + Company B (Target) Company A (Acquirer) Company A + Company B Company C (Newly Formed) Company B (Subsidiary) Mergers and Acquisitions Mergers and Acquisitions C C Ø H Small Clothing Retailer T + Mediumsized Clothing Retailer Ø V T Electronics Retailer Large Clothing Retailer Electronics Retailer/ Computer Manufacturer Computer Manufacturer 400-600-8011 cfa@gaodun.cn http://finance.gaodun.cn Mergers and Acquisitions Mergers and Acquisitions C M Ø C Ø S Ø I Ø I Shoe Manufacturer Organic Food Restaurant Ø A Shoe Manufacturer & Organic Food Restaurant Ø D Ø B Ø M Mergers and Acquisitions Mergers and Acquisitions M B Ø T Ø W E Ø U Ø C • E • O • T • P • F Ø N EPSA T E 400-600-8011 cfa@gaodun.cn T A E T S A MVT SA http://finance.gaodun.cn Example of Bootstrapping Earnings Summary Ø I Ø C • C • M ü B Ø E • Bootstrapping earnings Mergers and Acquisitions Forms of Acquisitions & Takeover Defense I L I C S L C I I D M M T M S T Ø C Ø D Ø C S P H H R I 400-600-8011 cfa@gaodun.cn H üC üH E üC üH http://finance.gaodun.cn Mergers and Acquisitions I L I C S L C I Mergers and Acquisitions I I D M T M M I C L S L C D M M E F D V C A üH Mergers and Acquisitions Mergers and Acquisitions F M A S P A T A S H SH A P • Ø S N N T CG P Ø C T S C L P üH üV üC C L F T M M H üV üH M S I I • CG • N U Ø M 400-600-8011 cfa@gaodun.cn http://finance.gaodun.cn Mergers and Acquisitions Mergers and Acquisitions M M S T M S Ø F • • • • B • T • O ü P Mergers and Acquisitions T D Mergers and Acquisitions M P O Ø P Ø Ø P Ø L Ø I CEO ü T • O M M • P T Ø H US J T S D M N Ø G Ø S Ø S Ø R Ø L Ø S Ø Ø F Ø P Ø G Ø W C J M Ø W 400-600-8011 cfa@gaodun.cn http://finance.gaodun.cn Mergers and Acquisitions Summary A Ø I Ø H H HHI  n  i P M L HHI ( S a le s o r o u t p u t o f f i r m i  100)2 T o t a l s a le s o r o u t p u t o f m a r k e t C C N B A M HHI G • F • T • H H Ø E A • N P H M Ø C I C Merger Analysis T Valuation of Mergers & Acquisitions Ø C V E n te rp rise V a lu e  DCF n F C Ft  1  W A C C  t 1 t  F C FT (1  g )  g W A C C N T N Ø C U Ø E N C M A Ø D NOPLAT N M A C C F 400-600-8011 cfa@gaodun.cn FCF http://finance.gaodun.cn Example of DCF Ø S P Example of DCF B B S I FCFF S R COGS G B Ø C B SGA B D P EBIT N EBT T N Example of DCF O C Example of DCF D N NWC I N × C T U C NI D T NOPLAT WACC D NWC WACC CAPEX T F 400-600-8011 cfa@gaodun.cn http://finance.gaodun.cn Example of DCF Merger Analysis T Ø Ø Merger Analysis T C V C A • E • E • C V DCF D C D D • F • E • WACC • T F C A F A WACC Example of Comparable Company Method C A C T Ø C PE Ø D • EV FCF EV EBITDA EV EBIT EV • P CF P S P E P BV I Ø P Ø PS T ( D e a lP r ic e  S to c k P r ic e ) T a k e o v e r P re m iu m  S to c k P ric e Ø 400-600-8011 S T T T T cfa@gaodun.cn × × PE PS × http://finance.gaodun.cn Merger Analysis T C Ø A Merger Analysis V C C C C T A C V C T Ø C • Ø C • • Ø D C C Ø D A • • D • • • Merger Analysis T C Ø A • N • • Merger Analysis V C C T T B E A Ø T P • PT T • VT R Ø A Ø D C T • A S R Ø VA • N • VA • D • VA • C cfa@gaodun.cn P S P T VT S • 400-600-8011 P T VT VA VT S C http://finance.gaodun.cn Example of Bid Evaluation Method B S S Example 4: Bid Evaluation S T S V B S S S S P N P I B S S S S S B S S Merger Analysis R S T E S S P S S G S G B S S Merger Analysis C M M AD C V Ø B Ø C Ø T Ø N Ø S Ø I T Ø M Ø A Ø S 400-600-8011 cfa@gaodun.cn http://finance.gaodun.cn Merger Analysis C R Summary of M&A K R M Ø C Ø T Ø P • D Ø R • C Ø F • C T B W C D Ø B A Ø S S Ø A • P • G Ø E Ø L Summary Ø I Ø C • V ü D ü C ü C • E Ø E You’re a Champion! • Thanks for staying with us You have finished this chapter 400-600-8011 cfa@gaodun.cn http://finance.gaodun.cn ... cfa @gaodun. cn http:/ /finance .gaodun. cn Preface C Corporate Governance M G O Ø T Ø D Ø T C A E C G S Ø D Ø C Ø I Ø F Ø C Corporate Governance Corporate Governance M A B F R Ø A 400-600-8011 cfa @gaodun. cn... S C F TS B Ø I Ø D Ø E Ø P C Ø CF NPV IRR S C Ø TNOCF S 400-600-8011 cfa @gaodun. cn T T TD NWCI TS T BT http:/ /finance .gaodun. cn Example 1: Evaluate Expansion Project S S C I PV NPV Example 2:... NWCI D TS T IRR 102, 000 150, 000   $ 3, t  % Ø D A Ø R NPV IRR BT 400-600-8011 cfa @gaodun. cn http:/ /finance .gaodun. cn Summary Ø I Evaluate Capital Projects Ø C • NPV IRR T ü S ü Ø E Ø C Ø E •