4.- Polypanel Case: What to do? (continued)

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Do curso por IESE Business School

Operational Finance: Finance for Managers

270 classificações

IESE Business School

Operational Finance: Finance for Managers

270 classificações

Curso 2 de 5 em Specialization Foundations of Management

When it comes to numbers, there is always more than meets the eye. In operational finance, you will learn how to read the “story” that the balance sheet and income statement tells about the company’s operations. The insights you gain from this “financial story” will then become a tool for short-term decision-making at the top management level relating to current assets, current liabilities and the management of working capital. Finally, by the end of the course you will understand the financial consequences of managerial decisions on operations, marketing, etc.

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Course Overview & Week 1

Welcome to Operational Finance: Finance for Managers. In this course you will learn the basics of operational finance to help you make sound financial decision or to run a robust business! Before you get started with this week's video content, please have a look at the course syllabus. In this first week, we'll discuss what operational finance is all about by looking at a business case. What do the numbers on the Balance Sheet and P&L Statement tell us about its performance and future prospects? If you were a bank, would you approve a half million euro loan for this business? Why or why not? Course objective: To get an overview of operational finance and the types of analyses necessary to develop solid financing decisions.

Welcome to the Course: Intro Video2:58

1.- Operational Finance: Course Outline1:26

2.- Introduction: Operational Finance2:59

3.- Polypanel Case: What to do?7:44

4.- Polypanel Case: What to do? (continued)5:23

5.- Business Analysis Part 1: Sales7:10

6.- Business Analysis Part 1: Sales, (continued)3:33

7.- Business Analysis Part 2: Strategy and Management5:51

8.- P&L Analysis Part 1: Sales and Gross Margin6:18

9.- P&L Analysis Part 1: Sales and Gross Margin, (continued)3:36

10.- P&L Analysis Part 2: OPEX, EBITDA and Financial Results6:14

11.- P&L Analysis Part 2: OPEX, EBITDA and Financial Results, (continued)2:09

12.- What is a Balance Sheet?7:38

13.- Polypanel's Balance Sheet8:36

14.- Polypanel's Balance Sheet, (continued)7:03

15.- Brief Recap3:08

Conheça os instrutores

Miguel Antón
Associate Professor
Financial Management

[MUSIC]

Hey Cos.

>> Hey Miguel, no way?

>> How are you? No way, long Long time no see.

>> How are things man?

>> Good, good. How are you?

>> It's been a long time since I last talked to you.

Four years ago, right?

>> I know.

I moved to Munich now.

I'm a branch manager of the bank in Munich.

>> Nice.

>> Yeah. >> And how is it going?

Is it good, like do you have a lot of work, many hours, or not?

A lot.

Is it as sunny as here or not?

>> No, no, no.

Beer, but it is not sunny.

>> At least you have good beer, right?

>> Yeah beer, of course.

>> Nice, nice.

>> Business is busy.

Even today I have this application.

We have to review but the team is divided and

>> The application of what?

>> The application of credit line.

>> Of a credit line?

Okay. >> Yes, yes.

Nice.

This is what you are doing now.

Yeah exactly.

>> Like managing applications of credit lines.

>> Yeah. We have to review and

we have to make adjustment but then the team is divided, so I don't know.

>> And you have a team?

You have a team?

>> Yes. >> Of how many people?

>> Three people.

>> Okay. So

they are helping you out, making these decisions.

>> Exactly.

>> Nice. >> Exactly.

But they didn't come to a conclusion so I'm kind of confused what to do for now.

>> But wait, why are they, why didn't you get to a conclusion with this guy?

>> Because they have a different opinions towards reviewing the company.

>> Really?

>> Yeah. >> Wow.

But it's the same company, right?

>> It's the same company but.

>> Did you have the financial statements of the company?

Here? >> Yes, yes.

Here. I was just reviewing it.

>> Show me, show me, show me.

>> You've been teaching so maybe you could help us out?

>> Well the thing is actually I'm doing a Coursera course for ESA right now.

>> Uh-huh. About finance.

>> Really? >> So

if you have the financial statements here, what we can do is you come with me and

then we can make the decision much better because you have a team that

is a little divided right?

Come with me and I'll show you.

>> Please, please, please let's do that.

Now, as we just saw, in the bank that we went in,

the bank manager just asked us for some advice on what to do.

Because they cannot agree as you saw there,

they cannot agree on whether to give them the credit or not.

One of the guys was actually saying yes,

give the credit because the company is actually growing.

But then the other guy said no, the returns are low.

And then, one said, yes, I actually

like the guy because the guys seems a pretty nice guy and then I trust him.

But then the other one starts to say, no but

wait because the profits of the company are low and I don't know if he should be

good to give the credit to this guy >> The other one is saying, well actually,

but how do you follow the costs?

This guy is very good at controlling the costs.

So because costs are controlled, we should give the credit.

But then the other was saying, no, but the profitability is low and then they kept on

saying things like yes, it's profitable, but no it's not profitable enough, or

well, no they cannot pay back if we give them so much money.

And the other one saying, yes, we should give them the credit because they actually

need it or yes, they are making money, right?

Or the other one is saying, no they have too much debt.

Mm-hm, my question to you, would you give the credit to Mr. Lichstein?

We don't know what the bank is doing but

we have to help them to understand whether to give the credit to this guy.

Would you give the credit to this guy or no?

Where would you base your decision?

Now, the thing is it turns out that all the reasons they gave,

they are actually somehow true.

The company is profitable.

They make money.

We do not know if they are going to be able to pay back in the future.

He is controlling the costs, but

at the same time, the company is growing >> They don't know exactly

if they need that much or not.

So both reasons for the yes and for the no are reasonable.

Then what do we do?

What is the correct answer?

Now, this is why we're here, to have a little order or

systematic approach to these kind of problems.

So, we need some framework in which we have an ordered way to look at things.

So, you would say, well, in order to answer this question of whether

to give the credit to this guy, I don't know.

What do you guys want?

Should we jump through the numbers?

Because we can go straight to the balance sheet and

the PNL and then just start looking at the numbers.

Now some of you might say, yes let's go into the numbers and

see what the numbers are.

And then try to understand the numbers and then make the decision.

Now I tell you, I don't know if this is the best idea.

Now I tell you why,

because if you look up numbers without a context, you might miss some things.

And you don't know what to expect.

Now before looking in to the numbers,

to be able to understand what to expect, it's very good to look at the context.

The context in this case would be the business analysis.

Like what is this company doing?

Because this guy came to the bank as we just saw and then he says I want a credit.

And the bank managers, the first thing they have to say is like who are you?

What are you doing?

What is your business about?

[MUSIC]

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