Magic Bible Arts – Extrait 9
evolving. Euh, isn't it too much despotic? it is, reason why he smiles, he starts to get his plans together, he starts to think, he starts to reckon, all the inside him is starting to boil, he s got difficulty to sustain it all, he knows the whole explosion, implosion, development, structuration will come soon. He's like the human being he is on the verge of creating. So like them, and very hungry, he s got the stomach twisting around. Fortunately he cannot make sound; void is valuing the silence, so. Chapter 5: Inflationary finance Scared from this experience, Edward starts finance by some standardize the accounting rules of Assets equalts to Equity and Liability. And transforming the model through the dynamism of market valuation. After a short spell, he tiptoes in the world of Finance management, excel to another sauce than the engineering radical one. The room is full of charts, of numbers, of pies or other sensitivity analysis on the 5 assumptions the person that did it calculates.
Out of 5 assumptions, a quick glance at it shows that: the debt to equity ratio was calculated from debt ratings, the Beta of equity is taken in comparison with main actors in the field, the volume of sales is following a growth of 3%, like a country, but in the simulation, this is carried out for 15 years, the capital expenditure is calculated on a percentage of sales, constant percentage over the years, and well the only plausible one, the depreciation is decided to follow a linear model. Still, the exchange rate is not taken into account, the cost of setting up the production and the risks involved in launching a new product are not, the market share is held constant with competitors and worst of all, the same discount could be applied in standards model to the free cash flow from every single year. As thought, he enters in direct confrontation with Finance. Hermione prepared his mind, but his mind couldnt be prepared to that. He was quite happy till then.
Not everything is measurable; qualitative is the way to assess better. And Bam here it comes, Finance and its younger cousin Excel. This cousin excels in explaining nonsense to reach the desired conclusion. Mixing qualititative and quantitative, asserting the assumptions, taking the results for granted. The power of numbers. If finance were a number, it would be Pi, an irrational number. Nothing is sufficient to calculate it thoroughly. Approximations are required, and more and more assumptions stated as you are reaching the final line of your desired conclusion. Ok now you have three projects on the table, an infinite source of money, which one are you selecting first? From this question came the first restructures of his young mind. Back to Tatoine: Tattooed on his back, NPV, Net present Value Comparables from market Ratios from Industry all these industrial legends pursue him. He will juggle with millions of virtual dollars, Euros, ok daft currency. A second life currency without the life behind. You can take all virtual risks without taking any real risks (see next chapter).
Is it useful? Is it required? Good sense comes back to Edward in another spell. Spell it: QALUIATVIE Mixing the n and t to the l, and this spell enables you to move from quantitative to the qualitative underlying it all. Even qualitatively, the power of debt is summoned as the best way to create more value and manage the way through it. Simply put, money is debt. Going back to the roots, he tries to understand the context but why he is not given the name of the company? Only number, he falls again in the social insurance numbering dilemma. Am I 1804587436337? Or am I Edward? Even tautology cannot explain the difference. Still difference is in the essence. And here you understand the life of the two last crises: CDS, FCF, ROIC, CDO. Even EVA, a
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