Week 1 - Value creation, FS, and from FS to CFs 2
Week 2 - Capital Structure and Valuation 7
Week 3 - CAPM, build-up, APT, Factor models 13
Week 4 - Risk Management 18
Week 5 - Issuance 22
1
,Week 1 - Value creation, FS, and from FS to CFs
1.1.1 - Value creation
NPV > 0 → project creates value
NPV < 0 → project destroys value
NPV = 0 → neither creation/destruction
MVA = Market Value Added = that attempts to measure the true economic profit produced by a
company.
EVA = Economic Value Added = is simply the difference between the current total market value of a
company and the capital contributed by investors (including both shareholders and bondholders). It is
typically used for companies that are larger and publicly-traded.
1.1.2 - Investment in growth (MVA and EVA)
ROIC = EBIT / Invested Capital → ROIC = 20%, IC is 500, then EBIT is 100.
Invested Capital = Operating working capital + net PPE + other assets
ROIC > WACC: investment in growth increases firm value
ROIC < WACC: investment in growth decreases firm value
ROIC = WACC: investment in growth is irrelevant
MVA = difference between MV and Invested Capital
1.1.3 - Financial Statements
- Income statement
- Balance sheet
- Cash flow statement
2
, 1.1.4 - From financial Statements to CFs
1.1.5 - Special topic: provisions or contingencies
Contingencies = A contingency is a potential negative event that may occur in the future, such as an
economic recession, natural disaster, fraudulent activity, or a terrorist attack.
Provisions = General provisions are balance sheet items representing funds set aside by a company
as assets to pay for anticipated future losses.
→ CF statement part of Operational cash flow
3
Week 2 - Capital Structure and Valuation 7
Week 3 - CAPM, build-up, APT, Factor models 13
Week 4 - Risk Management 18
Week 5 - Issuance 22
1
,Week 1 - Value creation, FS, and from FS to CFs
1.1.1 - Value creation
NPV > 0 → project creates value
NPV < 0 → project destroys value
NPV = 0 → neither creation/destruction
MVA = Market Value Added = that attempts to measure the true economic profit produced by a
company.
EVA = Economic Value Added = is simply the difference between the current total market value of a
company and the capital contributed by investors (including both shareholders and bondholders). It is
typically used for companies that are larger and publicly-traded.
1.1.2 - Investment in growth (MVA and EVA)
ROIC = EBIT / Invested Capital → ROIC = 20%, IC is 500, then EBIT is 100.
Invested Capital = Operating working capital + net PPE + other assets
ROIC > WACC: investment in growth increases firm value
ROIC < WACC: investment in growth decreases firm value
ROIC = WACC: investment in growth is irrelevant
MVA = difference between MV and Invested Capital
1.1.3 - Financial Statements
- Income statement
- Balance sheet
- Cash flow statement
2
, 1.1.4 - From financial Statements to CFs
1.1.5 - Special topic: provisions or contingencies
Contingencies = A contingency is a potential negative event that may occur in the future, such as an
economic recession, natural disaster, fraudulent activity, or a terrorist attack.
Provisions = General provisions are balance sheet items representing funds set aside by a company
as assets to pay for anticipated future losses.
→ CF statement part of Operational cash flow
3
