[MUSIC] So, what have we learned over those four weeks? Basically, I don't want to get too long on this, but I wanted to tell you that there is basically two things that we learned. Two things. The first one and the most important one was to learn a methodology. So a methodology, basically, on understanding how to do an analysis of a company and how to use the financial statements to draw diagonals this and to a solution and action plan. Now this methodology, let me summarize the methodology step by step. The first step, the most important step at the beginning is that we are here not just to analyze for the sake of analyzing. But when we analyze something, it's because we have to make a decision. In this case, the decision for was as a bank, do you give the credit to the company or not? So, all the analysis is action-oriented and this is very important. We don't things just for the sake of analyzing. Then once we know which is the decision that we have to make, we said before we jump into the numbers, we need to know the context. What is the business analysis? In the business analysis we say, what am I selling? To whom? Who is my supplier? What is the strategy of the company? What is the management team? We understood that doing a good business analysis would lead us to expect something from the numbers and read the financial statement with a much better understanding of what the business looks like. And then we jumped into the numbers and we said, okay, first, let's look at the P&L. And then we were analyzing the P&L in four different steps and very simple steps, which were looking at sales, gross Margin, OPEX and ROS. And that would give us a clear and quick idea of whether the company's economically viable or not. Is it making money or not? Then we moved on to the balance sheets. We said, okay, how do we analyze a balance sheet? For many of you, will be the first time you see a balance sheet. And we said, okay. In three very simple steps, you are able to get a very good glimpse at what a balance sheet looks like. The first one was to look at the structure in one year. Looking at the big numbers in the assets side and the liabilities side. See what we have in the assets side in terms of fixed assets and current assets and what is the quality of these assets? And by quality we meant, what is the probability of converting those assets into cash? Specifically, the current assets. Second part would be what is the evolution of the balance sheets over the years? So, what happened in the last four years? Where did we vest the money and where did we get the money from? And the last part was, if we have an increase in the asset side, what is that coming from? From a growth of sales? Or from a different policy in the correction of inventory? That is where we did this operation ratios of days of collection, days of inventory and days of payment. Once we had all these, we moved on to doing a forecast. Which is okay, fine, but they can they pay back in the future or not? And then we did the exercise slowly of a forecast to financial statements. First, forecast in the P&L and then we move on the forecast of the Balance Sheet. Remember that the most important thing when we did the forecast of the Balance Sheet is that we always fill in credit and cash at the very end. Once we have the analysis of the P&L and balance sheet and you've done a forecast, then we're in a good situation to do a diagnosis of the problem. Then we can step back for a second and say, okay, by looking at all of these, what is the problem of this company? The diagnosis is has to be clear, concise, concrete and complete. And once we get that diagnosis in which in the case from Polypanel, the diagnosis was the growth of NFO was bigger than the growth of working capital, then we can move on to an action plan. What do we do? What can we do to solve it? And the action plan has to be feasible, realistic. It has to be efficient. So, it has to be low-cost and it has to be effective. It has to solve the problem. This is the first block that I wanted to tell you that we have learned the methodology of six steps. The second thing we've learned is basically some important concepts in the operation of finance that can help us understand the business and understand the financial statements. I don't like to speak about ratios. Because the more ratios you have, the more confusing things get. So with very few concepts, we are able to understand many things. There were four basic concepts that we learned in this course. First one was Need of Funds for Operations. Every company needs some funds to operate on a daily basis and some companies or some small companies do not realize how important this is in the daily management of the company. And the definition of NFO was receivables + inventory- payables. And you have to finance that, every company has to finance that. And some companies, like Ponypanel have the NFO much more important than the fixed assets. The second concept we learned was working capital. With the long-term financing, you finance fixed assents. After financing the fixed assets, there's some money left for working operations, this is capital and we compute it by adding equity + long-term debt- fixed assets. Third concept that we learned is about Sustainable Growth. We understood the concept that a company to be able to grow without need of extra financing has to be profitable enough. And we said that to compute the sustainable growth of a company, we developed that formula and ended up knowing that depends on ROS and NFO as a percentage of sales. The higher the ROS, the higher the growth that you can have. And the higher the NFO, the higher the need of funds. So, the lower you can grow without extra financing from third parties and the last four concept that we learned was the Dupont Decomposition of the ROE. Very simple, but very useful. ROE can be decomposed in three parts. ROS, Turnover and Leverage. And with that, we can understand the strategy of the company. So with these two blocks learning a methodology, learning some concepts and play a small game. Now, you are in better shape to understand and analyze business problems. [MUSIC]
