METALTECH

CASE
The resolution of the METALTECH CASE
1, c
The First - SIN (SIN Investment) and
activity CASE
METALTECH 1 will WORK TO BE
be PERFORMED
- AF SIN (Financial Analysis in
received
1. Present the figures of the Strategic Plan:
by submitting
EXCLUSIVELY Balance Sheet
the SIN tabs and 2. Calculate the Ratios for the requested period
AF SIN within the (Pes
deadline 3. Calculation of the relationship between RE
for this purpose. and RF through the
The 4. Calculation of Vertical % and Horizontal
Tab WITH Analysis
should be sent 5. Questions to be solved (AF SIN tab) (I1)
6. From I49 (AF SIN tab) FREE TEXT: Tell me about your evolution
(2.016/2.017) and your comparison Any doubt about the CASE will be raised in the
FORUM qu
To work in the excel sheet, DO NOT enter values.
- As the only way to maintain the integrity of each cell - The correction of the numerical
values is automatic, it is - Only by operating cell by cell will it be possible to identify the
origin of the sheet The sheet IS PROTECTED and MUST NOT be unprotected
Any attempt to tamper with or unlock the sheet will result in a claim.
The statement of which is in the Classroom, will be presented in
the tabs

the situation of NO investment)

and P&L Account for the period, based on Assumptions provided (INS tab) INS tab)
Leverage in METALTECH 1 and SECTOR (AF SIN tab)
l of the company METALTECH SL (2.017 vs. 2016) (AF SIN tab)

agnóstico de la situación económico financiera de la empresa METALTECH SA en

fun n con los datos del sector (Very synthetic drafting with key points)
e will be opened for this purpose. THE CASE will also be worked on IN CLASS
. ONLY CELDA should be operated with CELDA: For the following reasons:
The calculation is made with all decimal places and the results can be as programmed for it. If
values are entered, the resulting data cannot be qualified with the error (if any) and can be
taken into account in the qualification of the activity.
e.
a will be considered an act of disloyalty and the activity will be graded with ZERO with no
entitlement
cati
on

mo good
METALTECH CASE 1
HYPOTHESIS for BALANCES
Replacement investment (% of previous year's gross 5%
Depreciation rate of gross property, plant and 10%
equipment
Stocks: PMA in days (Average Warehouse Period) 30 days
Clients: PMC in days (Average collection period) 60 days
Suppliers: % of Cost of Sales 30%
HR Creditor Administration 36% s/ Personnel Expenses
Tax rate on profits (income) 25% of

BALANCE 2,01
2,016 2,018 2,019
7
NON-CURRENT ASSETS 16,180 15,163 14,094 12,972
Land 2,000 2,000 2,000 2,000
Gross Property, plant and equipment 18,500 19,425 20,396 21,416
Accumulated Depreciation 4,320 6,263 8,302 10,444
CURRENT ASSET 3,337 3,93 4,808 5,947
Stocks 618 9 631 669 709
Customers 2,333 2,473 2,622 2,779
Treasury 385 835 1,518 2,459
Total Assets 19,517 19,101 18,902 18,919
NET WORTH 8,229 8,63 9,237 10,039
Capital Stock 8,000 8 8,000 8,000 8,000
Reservations 206 229 638 1,237
Income for the year 23 409 599 802
NON-CURRENT LIABILITIES 8,000 7,00 6,000 5,000
Payable to credit institutions to LP 8,000 0 7,000 6,000 5,000
CURRENT LIABILITIES 3,288 3,46 3,665 3,880
Payable to Credit Entities to CP 1,000 4 1,000 1,000 1,000
Suppliers 2,226 2,271 2,407 2,551
HR Creditor Administration 55 57 59 61
HP Payable for income tax 8 136 200 267
Total Shareholders' Equity and Liabilities 19,517 19,101 18,902 18,919

BALANCE SHEET 2,016 2,01 2,018 2,019

7
Non Current Assets 16,180 15,163 14,094 12,972
Net Current Assets 1,049 1,475 2,142 3,067
Net Assets 17,229 16,638 16,237 16,039
Equity 8,229 8,638 9,237 10,039
NON-Current Liabilities 8,000 7,000 6,000 5,000
Current Liabilities (financial) 1,000 1,000 1,000 1,000
Shareholders' equity and liabilities 17,229 16,638 16,237 16,039
AVERAGE BALANCE SHEET 2015/2016 2016/2017 2017/20182018/2019
 Non-Current Assets 16,694 15,671 14,628 13,533
Net Current Assets 984 1,262 1,809 2,605
Average Net Assets 17,678 16,933 16,437 16,138
Equity 8,178 8,433 8,937 9,638
NON-Current Liabilities 8,500 7,500 6,500 5,500
Current Liabilities (financial) 1,000 1,000 1,000 1,000
Shareholders' equity and liabilities 17,678 16,933 16,437 16,138

Note:
Average Balance Sheets are the half-sum of two consecutive Balance Sheets and therefore
indicate with used throughout the year. The balance sheet is a snapshot of the company's
situation and therefore refers to a given moment, to a specific date.
Some ratios are more meaningful when using average balance sheets, e.g., economic profitability
measures management efficiency and relates BAIT to Assets Measured over the year. Here it is
interesting.
Measured on final assets or on initial assets, the measure is distorted.
Other ratios prefer the Balance Sheet at the end of the year, for example if you want to know
what is the indebtedness One thing is what has been the indebtedness used during the year and
another is what is the financial profitability of interest to the shareholder?
One thing is the financial profitability with respect to the shareholders' equity with which they
have worked, but what interests the shareholder is to know how much they have earned in
relation to what they had invested at the beginning of the previous year's balance sheet.
 1. Present figures Strategic Plan: Balance Sheet and Cu
2. Calculate the Ratios for the period requested
3. Calculation of the relationship between RE and RF through
d
4. Calculation of Vertical % and Horizontal Analysis of l
5. Questions to be solved (AF SIN tab) (I1)
6. From I49 (AF SIN tab) FREE TEXT
Decembe
r

1 RATIOS FOR THE

2,020 2,021 2,022 PERIOD
Liquidit
y
 11,794 10,558 9,259 Working Capital
2,000 2,00 2,000 Liquidity:
22,487 0 23,61 24,792 Acid Test:
12,692 1 15,05 17,533 Treasury
7,374 4 9,108 11,171 Solvency/ Risk
751 796 844 Solvency
Indebtedness
2,946 3,12 3,310
Self-financing
3,677 3 5,18 7,017
Interest coverage
19,168 9 19,66 20,430 Return on average balance sheet
11,060 6 12,31 13,821 Economic Return on Investment (ROI)
8,000 5 8,00 8,000 Margin
2,039 0 3,06 4,315 Rotation
1,021 0 1,25 1,506 Financial Profitability (ROE)
4,000 5 3,00 2,000 Indebtedness ( e ):
4,000 0 3,00 2,000 About Balance Sheet at the beginning of the
4,108 0 4,35 4,609 year
1,000 1 1,00 1,000 Financial return on initial PF
2,704 0 2,86 3,038
64 6 66 69
340 418 502
19,168 19,66 20,430
6
2,020 2,02 2,022
1
11,794 10,55 9,259
4,265 8 5,75 7,561
16,060 7 16,31 16,821
11,060 5 12,31 13,821
4,000 5 3,00 2,000
1,000 0 1,00 1,000
16,060 0 16,31 16,821
5
2019/2020 2020/2021 2021/2022
12,383 11,176 9,908
3,666 5,011 6,659
16,049 16,187 16,568
10,549 11,687 13,068
4,500 3,500 2,500
1,000 1,000 1,000
16,049 16,187 16,568

more realistically the trimonial and financial values of the

Economic Profitability.
io, the resources used
at that time.
e is held at the end of the year.

The most important thing is to be able to go to the

 WORK TO BE DONE IN POLYMER I

P and G for the period based on the hypotheses provided.

Financial Leverage in METALTECH I and in the SECTOR (AF SIN tab) company METALTECH SL (2.017
vs. 2016) (AF SIN tab)

Initial Strategic Plan, (WITHOUT investment in machinery renovation for change of

mat
2,016 2,017 2,018 2,019
Net Equity + NON-Current Liabilities - NON-Current 49 475 1,142 2,067
Assets
Current Assets / Current Liabilities 1.01 1.14 1.31 1.53
(Current Assets - Inventories) / Current Liabilities 0.83 0.96 1.13 1.35
Cash / Current Liabilities 0.12 0.24 0.41 0.63

Assets / Liabilities 1.73 1.83 1.96 2.13

Liabilities / Equity and Liabilities 57.8% 54.8% 51.1% 46.9%
Shareholders' Equity / Net Worth and Liabilities 42.2% 45.2% 48.9% 53.1%
BAIT / Interest 1.08 2.60 3.66 5.11
BAIT / Average Net Assets 2.32% 5.23% 6.68% 8.24%
Margin 2.9% 6.0% 7.0% 8.0%
Sales / Average Net Assets 0.79 0.88 0.96 1.03
B / Average Shareholders' Equity 0.28% 4.85% 6.70% 8.33%
Average Financial Debt / Average Shareholders' 1.16 1.01 0.84 0.67
Equity
B / Shareholders' equity at the
beginning of the year
HYPOTHESIS for P and G 2,017 2,018 2,019
Sales variation (%) 6% 6% 6%
Gross Margin (%) 47% 49% 49% 49%
Current staff (December 2.016) 80
Increase in headcount (no.) each year 2 2 2
Forecast headcount for each year 82 84 86
Increase in headcount (%) each year 2.5% 2.4% 2.4%
Salary increase (%) 1.5% 1.5% 1.5%
Increase Other Operating Expenses (%) 2% 2% 2%
Interest rate DebtFinancial 4.0% 4.0% 4.0% 4.0%
Tax rate: % tax on profits 25% 25% 25% 25%
0.3% 5.0% 6.9% 8.7%

P & G ACCOUNT 2,016 2,017 2,018 2,019

Sales 14,000 14,840 15,730 16,674
Cost of sales 7,420 7,568 8,023 8,504
Gross Margin 6,580 7,272 7,708 8,170
Personnel Expenses 1,820 1,893 1,969 2,046
Other operating expenses 2,500 2,550 2,601 2,653
EBITDA 2,260 2,828 3,138 3,471
Amortizations 1,850 1,943 2,040 2,142
BAIT (Earnings Before Interest and Taxes), EBIT 410 886 1,099 1,330
Interests 380 340 300 260
BAT (Earnings Before Taxes), EBT 30 546 799 1,070
Income tax 8 136 200 267
Profit for the year, Profit for the year, Profit for 23 409 599 802
the year
rial)
2,020 2,021 2,022
3,265 4,757 6,561
1.79 2.09 2.42
1.61 1.91 2.24
0.89 1.19 1.52

2.36 2.68 3.09

42.3% 37.4% 32.4%
57.7% 62.6% 67.6%
7.19 10.30 15.34

9.85% 11.45% 12.96%

8.9% 9.9% 10.8%
1.10 1.16 1.20
9.68% 10.74% 11.52%
0.52 0.39 0.27

10.2% 11.3% 12.2%

2,020 2,021 2,022
6% 6% 6%
49% 49% 49%

2 2 2
88 90 92
2.3% 2.3% 2.2%
1.5% 1.5% 1.5%
2% 2% 2%
4.0% 4.0% 4.0%
25% 25% 25%

2,020 2,021 2,022

17,675 18,735 19,859
9,014 9,555 10,128
8,661 9,180 9,731
2,125 2,206 2,289
2,706 2,760 2,815
3,830 4,214 4,627
2,249 2,361 2,479
1,581 1,853 2,148
220 180 140
1,361 1,673 2,008
340 418 502
1,021 1,255 1,506
 BALANCE SHEET 2016
ACTIVE EQUITY AND LIABILITIES
NON-CURRENT ASSETS 16,180 NET WORTH
Land 2,000Capital Stock
Gross Property, plant and equipment 18,500 Reservations
Accumulated Depreciation 4,320Income for the year
NON-CURRENT LIABILITIES
CURRENT ASSET 3,337Payable to credit institutions to LP
Stocks 618CURRENT LIABILITIES
Customers 2,333Payable to credit institutions to CP
Treasury 385Suppliers
HR Creditor Administration
HP Payable for income tax
Total Assets 19,517 Total Shareholders' Equity and
Liabilities
11 1 1
balances 156
1 1 1 1
1 1 1 1
1 1 1 1
1 1 1 1
1 1 1 1
2 2 2 2
2 2 2 2
3 3 3 3
1 1 1 1
1 1 1 1
1 1 1 1
2 2 2 2
1 1 1 1

1 1 1 1
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1 1 1 1
1 1 1 1
2 2 2 2
1 1 1 1
1 1 1 1

Template 12
1 1 1 1
1 1 1 1

P yG 72
1 1 1 1
1 1 1 1
1 1 1 1
1 1 1 1
1 1 1 1
1 1 1 1
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1 1 1 1
1 1 1 1
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11 1 1
 ratios 97
1 1 1 1 1 1 1 1 1
1 1 1 1 1 1 1 1 1
1 1 1 1 1 1 1 1 1
1 1 1 1 1 1 1 1 1
1 1
2 2 1 1 1 1 1 1 1
2 2 1 1 1 1 1 1 1
3 3 0 1 1 1 1 1 1
1 1 1 1 1 1 1 1 1
1 1
1 1 1 1 1 1 1 1 1
2 2 1 1 1 1 1 1 1
1 1 1 1 1 1 1 1 1
1 1 1 1 1 1 1
1 1 1 1 1 1 1 1 1
1 1
1 1 1 1 1 1 1 1 1
1 1
2 2
1 1
1 1

11
11

11
1 1
1 1
1 1
1 1
1 1
1 1
1 1
1 1
1 1
1 1
1 1
METALTECH CASE 1 FINANCIAL ANALYSIS INITIAL SITUATION

Ratios based on Balance Sheet Data Formula

Liquidity
Working Capital Net Equity + NON-Current Liabilities - NON-Current Assets
Liquidity: Current Assets / Current Liabilities
Acid Test: Current Assets - Inventories / Current Liabilities
Treasury Treasury / Current Liabilities
Solvency/ Risk
Solvency Assets / Liabilities
Indebtedness Liabilities / Equity and Liabilities
Self-financing Shareholders' Equity / Net Worth and Liabilities
Interest coverage BAIT / Interest
Return on average balance sheet
Economic Return on Investment (ROI) BAIT / Average Net Assets
Margin BAIT/Sales
Asset Turnover Sales / Assets
Financial Profitability (ROE) B / Average Shareholders' Equity
Indebtedness ( e ): Average Financial Debt / Average Shareholders' Equity
About Balance Sheet at the beginning of the year
Financial return on initial PF B / Shareholders' equity at the beginning of the year

LEVERAGE CALCULATION METALTECH SECTOR

with Average Financial Balance Values 2017 over 2016/2017
Economic Return on Investment (ROI) = RE 5.23% 6.0%
i 4.0% 5.0%
RE - i 1.23% 1.0%
e (indebtedness: Debt / Equity) 1.01 2.0
(RE - i ) x e 1.24% 2%
RE + (RE - i ) x e 6.47% 8%
t 25% 25%
RF = [RE + (RE - i ) x e] x ( 1 - t ) 4.85% 6.0%

sector average P & L ACCOUNT 2,016 2,017 % See 2,016

Sales 15,000 16,050 100
Cost of sales 7,050 7,383 47.0%
Gross Margin 7,950 8,667 53.0%
Personnel Expenses 1,800 1,854 12.0%
Other operating expenses 2,700 2,727 18.0%
EBITDA 3,450 4,086 23.0%
Amortizations 2,400 2,568 16.0%
BAIT 1,050 1,518 7.0%
Interests 350 320 2.3%
BAT 700 1,198 4.7%
Income tax 175 300 1.2%
B 525 899 3.5%

MetalTech 2,01
2,016 7 % See 2,016
Sales 14,000 14,840 1
Cost of sales 7,420 7,568 53.0%
Gross Margin 6,580 7,272 47.0%
Personnel Expenses 1,820 1,893 13.0%
Other operating expenses 2,500 2,550 17.9%
EBITDA 2,260 2,828 16.1%
Amortizations 1,850 1,943 13.2%
BAIT 410 886 2.9%
Interests 380 340 2.7%
BAT 30 546 0.2%
Income tax 8 136 0.1%
B 23 409 0.2%
 The resolution of the METALTECH CASE 1, c 1
- SIN (SIN Investment) and 1
- AF SIN (Financial Analysis in 1
The statement of which is in the Classroom, will be
presented in the tabs 3
the situation of NO investment) 3
cation 4
HYPOTHESIS for BALANCES 5
Note: 6
RATIOS FOR THE PERIOD 7
WORK TO BE DONE IN POLYMER I 10
Initial Strategic Plan, (WITHOUT investment in
machinery renovation for change of mat 10
rial) 13
BALANCE SHEET 2016 15
FINANCIAL ANALYSIS INITIAL SITUATION 21
ISSUES TO BE RESOLVED 27
To answer place yourself in the colored cell and
activate the drop-down menu 27
Using 2017 data, answer the questions. 27
ISSUES TO BE RESOLVED 27
SECTOR 29
METALTECH CASE 2 30
The resolution of METALTECH CASE 2, c - CON
(Situation of the Company) 30
1. Present the figures of the HABIEND
Strategic Plan. 30
 2. Calculate the Ratios for the period 30
3. Answer QUESTIONS to RESOLVE 30
4. Investment Recommendation 30
5. Commentary on the investment to be made as
of 30
6. Management Mechanisms on which to act in
order to 30
To work in the excel sheet, DO NOT enter values.
30
The statement of which is in the Classroom, will be
presented in the METALTECH WITH Inversion tab).
31
SBI made the investment 31
of the appraisals performed 31
to improve Financial Profitability 31
. ONLY CELDA should be operated with
CELDA:for the following reasons 31
e. 31
Investment in 39
NCIERO a 2,022 40
Activate the drop-down menu 42
the investment? On what basis? 42
Would you recommend the investment in view
of the difference in valuation? Does the result
change with 4% perpetuity? 43
a rate of 46
FREE TEXT: Management mechanisms on
which to act for improvement 47
 METALTECH I SECTOR
2017
2016 2017

49 475 POSITIVE

1.01 1.14 1.5

0.83 0.96 1.1
0.12 0.24 0.8

1.7 1.8 1.33

58% 55% 75%
42% 45% 25%
1.08 2.60 4.0

2.32% 5.23% 8%
2.9% 6.0% n.d
0.79 0.88 n.d
0.28% 4.85% 6.0%
1.16 1.01 2

0.27% 4.97% 11.7%

M
E
T
1

ticals Horizontal Analysis

2,017 Diff %
100 1,050 7.0%
46.0% 333 4.7%
54.0% 717 9.0%
11.6% 54 3.0%
17.0% 27 1.0%
25.5% 636 18.4%
16.0% 168 7.0%
9.5% 468 44.6%
2.0% -30 -8.6%
 7.5% 498 71.1%
1.9% 125 71.1%
5.6% 374 71.1%

ticals Horizontal Analysis

2,017 Diff %
1 840 6.0%
51.0% 148 2.0% M
49.0% 692 10.5%
E
12.8%
17.2%
73
50
4.0%
2.0%
T
19.1% 568 25.1%
13.1% 93 5.0% 1
6.0% 476 116.0%
2.3% -40 -10.5%
3.7% 516 1718.7%
0.9% 129 1718.7%
2.8% 387 1718.7%
ISSUES TO BE RESOLVED

To answer place yourself in the colored cell and activate the drop-down
menu
Using 2017 data, answer the questions.
Can you say that you are financially independent?
Do you have Liquidity problems according to the Liquidity ratio?
Are you at risk of insolvency?
With the cash you have, can you meet some of the payments to CP?

Is it a solvent company?
Is it more indebted than the industry average?
Is it more self-financing than the industry average?
Does it generate enough BAIT to meet the interest on the debt?

Which factor has the greatest influence on the improvement of METALTECH

SA's ROI?
What is the product Margin x Turnover equal to?
What is the necessary condition for RF > RE?
How much did PF amount to at the beginning of 2016?
What value does the leverage margin take?

How much has member RF improved in percentage points?

ISSUES TO BE RESOLVED
DO NOT INSERT VALUES. Always use excel's "equals to", to identify the
correspondent or enter the formula needed to answer the question.
Data referring to 2,017 METALTECH
How fast are sales growing? 6.0%
What gross margin do you work with? 49.0%
How much does the gross margin improve in % ? 10.5%
How many percentage points does the margin improve? 2.0

How much are Personnel Expenses (% of sales) (%) 12.8%

How much do personnel expenses vary? (in %) 4.0%
By how many percentage points do Personnel Expenses vary? -0.24

How much do Other Operating Expenses weigh? 17.2%

What EBITDA do you work with? (EBITDA s / Sales) How much 19.1%
BAIT has improved (in %) 116.0%

What ROS (Return on sales) do you work 2.76%

with?
 FREE TEXT: Diagnosis of the economic and financial situation of METALTECH as of 2017 and
(2,016/2,107), of the forecasts and in comparison with the data from the

Financial Analysis:
Working capital: The company has as a result of 2017, 475 euros, which after
taking care of all its payments, it would still have that amount left over and so
financial.
Liquidity - The 2017 ratio is 1.14 and the ideal is that Current Assets should be
times Current Liabilities, this figure obtained by the company is even inferi
indicates a liquidity risk in the 2016-2017 comparison period.
Acid test: This result is not so satisfactory, because it means that for every
company that has 0.96 units of cash to assume its short term obligations, the
company has a lower capacity to cover its current liabilities with its assets
compared to the industry, which evidences that the inventory constituted
within its current assets.
Treasury.- We can notice that the company's effective funds have doubled
from 0.12 in 2016 to 0.24 in 2017. With the current cash flow, only short-term
debts are being paid, but this situation can improve because over the course
of the year the cash flow will increase considerably from one year to the next.
Indebtedness - The results indicate that the company is financed at a lower
percentage than the sector, it has an ideal level of indebtedness. Based on the
results of the ratio, it shows that the company with 1.01 has less commitment
in relation to the sector, which is 2.
The decrease in the debt ratio allows the company to increase its solve
 YES
NO, because it is above one,
Yes, because it continues to be below the sector
It is not known, it depends on the collection and payment schedule.

YES
NO
YES
YES

Margin
Economic profitability
Let RE > i
8,206
6.47%

4.70

cell that is
SECTOR
7.0%
54.0%
9.0%
1.0

11.6%
3.0%
-0.4

17.0%
25.5%
44.6%

5.6%
n accordance with their sectoral evolution
which means that anto possesses equilibrium

approximately 1.5 or so to the sector, which gives us

The euro is the most liquid current account, obviously the most liquid current
account, a major element of the

year to year, they would pay 24% of the year will go

to another.
55% with borrowed funds and the debt ratio, the equity.
 METALTECH CASE 2
The second activity
METALTECH CASE 2 will
be The resolution of METALTECH CASE 2, c
presented in the tab
WITH, but including - CON (Situation of the Company)
also the tabs of
the activity METALTECH 1.
1 which will have WORK TO BE
already been
delivered within the PERFORMED

This will be done in

order to be able to
"copy and paste"
figures
from CASE 1 when
necessary to solve
CASE 2, and not having

Therefore, when
submitting II,
the two
will be submitted

Present the figures of the HABIEND Strategic Plan.

2. Calculate the Ratios for the period
3. Answer QUESTIONS to RESOLVE
4. Investment Recommendation
5. Commentary on the investment to be made as of
6. Management Mechanisms on which to act in order to
Any questions about the CASE will be raised in the FORUM qu
To work in the excel sheet, DO NOT enter values.
- As the only way to maintain the integrity of each cell - The correction of the
numerical values is automatic, it is - Only by operating cell by cell will it be possible to
identify the origin of the sheet The sheet IS PROTECTED and MUST NOT be
unprotected Any attempt to tamper with or unlock the sheet will result in a claim.
The statement of which is in the Classroom, will be presented in
the METALTECH WITH Inversion tab).

SBI made the investment

of the appraisals performed

to improve Financial Profitability
e will be opened for this purpose. THE CASE will also be worked on IN CLASS
. ONLY CELDA should be operated with CELDA:for the following reasons
The calculation is made with all decimal places and the results can be as programmed for it. If
values are entered, the resulting data cannot be qualified with the error (if any) and can be
taken into account in the qualification of the activity.
e.
a will be considered an act of disloyalty and the activity will be graded with ZERO with no
rights.
mo good
HYPOTHESIS for BALANCES HYPOTHESIS IN
METALTECH CASE 2
Replacement investment (% of gross fixed assets, previous year) 5% New Inver
Depreciation rate of gross property, plant and equipment 10% Investment
Stocks: PMA in days (Average Warehousing Period) 30 in Financing:
Clients: PMC in days (Average collection period) 60
Suppliers: % of Cost of Sales 30%
HR Creditor Administration 36% Growth d
Tax rate 25% g: Growth
Balance Sheets and P&L Accounts WITH the
new In
BALANCE 2,01
2,017 2,018
6
Non-Current Assets 16,180 15,163 18,234
Land 2,000 2,000 2,000
Gross Property, plant and equipment 18,500 19,425 24,996
Accumulated Depreciation 4,320 6,263 8,762
Current Assets 3,33 3,939 5,718
Stocks 7 618 631 603
Customers 2,333 2,473 2,622
Treasury 385 835 2,494
Total Assets 19,517 19,101 23,953
Net worth 8,22 8,638 12,451
Capital Stock 9 8,000 8,000 11,000
Reservations 206 229 638
Income for the year 23 409 814
NON-CURRENT LIABILITIES 8,00 7,000 7,600
Payable to credit institutions to LP 0 8,000 7,000 7,600
CURRENT LIABILITIES 3,28 3,464 3,901
Payable to Credit Entities to CP 8 1,000 1,000 1,400
Suppliers 2,226 2,271 2,171
HR Creditor Administration 55 57 59
HP Payable for income tax 8 136 271
Total Liabilities 19,517 19,101 23,953

BALANCE SHEET 2,016 2,017 2,018

Non Current Assets 16,180 15,163 18,234
Net Current Assets 1,049 1,475 3,217
Net Assets 17,229 16,638 21,451
Equity 8,229 8,638 12,451
NON-Current Liabilities 8,000 7,000 7,600
Current Liabilities (financial) 1,000 1,000 1,400
Shareholders' equity and liabilities 17,229 16,638 21,451

AVERAGE BALANCE 2015/2016 2016/2017 2017/2018

Non-Current Assets 16,694 15,671 16,698
Net Current Assets 984 1,262 2,346
Average Net Assets 17,678 16,933 19,045
Equity 8,178 8,433 10,545
NON-Current Liabilities 8,500 7,500 7,300
Current Liabilities (financial) 1,000 1,000 1,200
Shareholders' equity and liabilities 17,678 16,933 19,045

ANALYSIS OF THE NEW INVESTMENT 2,017 2,018

BAIT 0 327
Theoretical taxes: tax rate................ 25% 0 82
Amortization: amortization rate of the 10% 460 460
investment
Initial investment in fixed assets -4,600
Investment in working capital 400
Free Cash Flow -4,600 305
Gross Surplus 5,763
NPV (calculated by applying the formula year by 2,466 -4,600 286
year)
NPV (calculated with Excel) ............................. 2,466
Pay Back calculation row: FCF accumulated year to year -4,600 -4,295
Pay Back. YEAR:.................................................. 5
IRR (calculated with excel).................................. 15%
NPV calculation using IRR as the discount rate 0.00

WACC Calculation for Investment 2017/2018 WACC ISSUES

Analysis
KL (risk-free rate) 2% for With this Pay
Km (Average market return) 8% EVALUATION What does it
mean
What does it
β : Volatility of the sector/company 1.20
(Km - KL) 6% mean
Surplus
(Km - KL) x β 7.20% K=K
Ke (partner profitability) 9.200% 9.200% Deudí
Kd (cost of financial debt) 4.0% 4.0%
% PF: (PF / (PF + Financial debt)) 55.4% 47.8%
% Debt: (Financial Debt / (PF + Fin. Debt) 44.6% 52.2%
t (tax rate) 25% 25%
K = CPPC = WACC 6.43% 5.96%

VALUATION METALTECH II (CON) 2,016 2,017 2,018

BAIT 886 1,425
Theoretical Taxes 25% 221 356
Amortization 1,943 2,500
Investment in fixed assets 925 5,571
Investment in Working Capital -23 483
Free Cash Flow 1,705 -2,486
Perpetual growth 34 -50
Terminal value 0 0
Present value of Free Cash Flow 9,295
Present value of terminal value 62,669
Company value 71,964
Net financial debt 8,500
Value of shares 63,464Add Land Value

VALUATION METALTECH I (SIN) 2,016 2,017 2,018

BAIT 886 1,099
Theoretical Taxes 25% 221 275
Amortization 1,943 2,040
Investment in fixed assets 925 971
Investment in Working Capital -23 -15
Free Cash Flow 1,705 1,908
Perpetual growth 34 38
Terminal value 0 0
Present value of Free Cash Flow 11,048
Present value of terminal value 47,675
Company value 58,722
Net financial debt 7,500
Value of shares 51,222Add Land Value
9.61
 FINE
version
ANALYSIS
VERSION AND VALUATION The column V
sion in Machinery retrofitting in 2018 4,600 cThe W column
Working Capital 2018 400 Column X c
The column Z
60% Capital increase 3,000
M s
40% 5-year loan
Interest rate Loan
2,000
4.00%
ET From the c
From the c
the FCF of the Investment as from 2023 6%
or in perpetuity 2%
T
2 RATIOS OF
2,019 2,020 2,021 2,022 Liquidity
16,859 15,416 13,900 12,309 Man Fund
2,000 2,000 2,000 2,000 Liquidity:
26,246 27,558 28,936 30,383 Acid Test:
11,387 14,143 17,036 20,075 Treasury
6,903 8,555 10,577 13,122 Solvency/ Rie
639 663 703 728 Solvency
2,779 2,946 3,123 3,310 Indebtedness
3,485 4,947 6,752 9,084 Self-financing
23,762 23,971 24,477 25,430 Coverage of i
13,463 14,857 16,525 18,636 Profitability s
11,000 11,000 11,000 11,000 Profitability E
1,451 2,463 3,857 5,525 Margin
1,011 1,394 1,669 2,111 Rotation
6,200 4,800 3,400 2,000 Profitability Fi
6,200 4,800 3,400 2,000 Indebtedness
4,100 4,314 4,552 4,794 About
1,400 1,400 1,400 1,400 Balance
Profitability Fi
2,301 2,386 2,529 2,621
61 64 66 69 MET
337 465 556 704
23,762 23,971 24,477 25,430 2
2,019 2,020 2,021 2,022
16,859 15,416 13,900 12,309
4,204 5,641 7,425 9,728
21,063 21,057 21,325 22,036
13,463 14,857 16,525 18,636
6,200 4,800 3,400 2,000
1,400 1,400 1,400 1,400
21,063 21,057 21,325 22,036

2018/2019 2019/2020 2020/2021 2021/2022

 17,547
1,250 16,138
1,312 14,658
1,378 13,104
1,447 Capital Circula
3,710-5 4,922
-24 6,533
-21 8,576-29 M Investment in
2,640 3,069 3,370 3,855
21,257 21,060 21,191 21,681
E C
12,957
53
6,900 0
14,160
61
0
5,500
15,691
67
4,100 0
17,581
77
88,702
2,700
T
1,400 1,400 1,400 1,400
21,257 21,060 21,191 21,681 2

2,000 65,464

2,019 2,020 2,021 2,022 Investment

2,019 2,020 2,021 2,022 2,023 Stocksin2,024
1,330 1,581 1,853 2,148
351 553 592 831Customers
332 395 463 537
88 138 148 208Suppliers and
2,142 2,249 2,361 2,479
1,020 460
1,071 460
1,124 460
1,181 460Working
-17 -19 -21 -23 Capital
Investment in
2,136 2,383 2,648 2,933
723
43 875
48 904
53 1,08359 1,148 C 1,217
0 0 0 67,479 Comment: Re
638 726 704 793 790 growth to787
The company
-3,572 -2,697 -1,793 -710 438 lue of 57,399,
1,655
am evidently
With the 4%
rate rate it is
2,000 53,222

TO ANSWER To answer
Back, do you consider that the investment should be ---------• Pay Back does
made?
that the NPV not
2,466 ? ----------• That the A-
is ..................
that the IRR Value
.. 15%? ----------• That this is the
is.....................
Gross obtained indicates Is the project feasible? ----------• rIt only says
that If we advise which indicates that the investment of decided
that e that e
e PF/(PF+Debt)+Kd (1-t)
2/(PF+Debt)
Ke = K l+(Km-Kl) x 3

Would you
advise
2,019 2,020 2,021 2,02 Investment
1,681 2,134 2,445 2 2,97 in
Stocks
420 534 611 9 745 Customers
2,625 2,756 2,894 3,03 Suppliers and
8
NCIERO a 2,022

r contains the ratios calculated at the end of the period (2,022) IF THE INVESTMENT HAD NOT
BEEN MADE r contains the ratios calculated at the end of the period (2,022) IF THE INVESTMENT
HAD NOT BEEN MADE calculates the difference in the values of the ratios in the two situations.
on the ratios that the sector foresees for 2,022
elda (AB9) there are a number of "QUESTIONS TO RESOLVE".
elda (A31) there is FREE TEXT

PERIOD Strategic Plan WITH investment inmachinery renewal

2,016 2,017
iobra Net Equity + NON-Current Liabilities - NON- 49 475
Current Assets
Current Assets / Current Liabilities 1.01 1.14
Current Assets - Inventories / Current Liabilities 0.83 0.96
Cash / Current Liabilities 0.12 0.24
sgo
Assets / Liabilities 1.73 1.83
o Liabilities / Equity and Liabilities 57.8% 54.8%
on Shareholders' Equity / Net Worth and Liabilities 42.2% 45.2%
nterests BAIT / Interest CI 1.08 2.60
over Average Balance Sheet
conomic (ROI) BAIT / Average Net 2.32% 5.23%
Assets
BAIT / Sales 2.9% 6.0%
Sales / Average Net Assets 0.79 0.88
nancing (ROE) B / Average Shareholders' Equity 0.28% 4.85%
o ( e ): Average Financial Debt / Average Shareholders' 116.17% 100.79%
Equity
Financial at the beginning of the year
nancing on PF inB / Equity at the beginning of the year 0.3% 5.0%

HYPOTHESIS for P and G 2,017

Sales variation (%) 6%
Gross Margin (%) 49%
Current staff (December 2.016) 80
Increase in headcount (no.) each year 2
Forecast headcount for each year 82.00
Increase in headcount (%) each year 2.50%
Salary increase (%) 1.5%
Increase Other Operating Expenses (%) 2%
Interest rate DebtFinancial 4.0%
Tax rate: % tax on profits to be applied to BAT 25%

P&L Account 2,016 2,017

Sales 14,000 14,840

Cost of sales 7,420 7,568
Gross Margin 6,580 7,272
Personnel Expenses 1,820 1,893
Other operating expenses 2,500 2,550
EBITDA 2,260 2,828
Amortizations 1,850 1,943
BAIT (Earnings Before Interest and Taxes), EBIT 410 886
Interests 380 340
BAT (Earnings Before Taxes), EBT 30 546
Income tax 8 136
Profit for the year, Profit for the year, Profit for the year 23 409
Activate the drop-down menu
2,025 2,026 2,027
is sufficient as a criterion
Economic Return on Investment
(ROI) = RE

RE - i
1,290 1,368 1,450 e (indebtedness: Debt / Funds (ER -
i)xe
784 780 777 RE + (RE - i ) x e
t
2,945 4,313 5,763 RF = [RE + (RE - i ) x e] x ( 1 - t )
RF = BºFINANCIAL
/ FP LEVERAGE
Values Average Financial Balance

The actual amount of the dividends to be generated by the project is that amount of the
investment's net investment income.
he project is clearly not rejectable

the investment? On what basis?

s the investment is made since the recommended NPV is positive and the result is 2466, we will
obtain this annual percentage of the initial investment.
he project was 5,000 and the gross surplus was 5763, analyzing all these figures, the project is
profitable.

Working Capital 2016 2017 2018 2019 2020

618 631 603 639 663
2,333 2,473 2,622 2,779 2,946
Creditors 2,288 2,464 2,501 2,700 2,914
 nte 664 640 724 719 694
Current Assets -23 83 -5 -24

Working Capital 2016 2017 2018 2019 2020

618 631 669 709 751
2,333 2,473 2,622 2,779 2,946
Creditors 2,288 2,464 2,665 2,880 3,108
nte 664 640 625 608 589
pital Circulating -23 -15 -17 -19

Would you recommend the investment in view of the difference in valuation? Does the result
change with 4% perpetuity?
The value of the investment would be 72,425, while without the investment the value of the
investment would be 72,425, while without the investment the value of the investment would be
72,425.
bos values when divided by the number of shares is the profit that each shareholder ob
Metaltech making the investment will be able to offer a more profitable value per share.
growth of the company of 2%, the difference between the value of the companies is 21%, m 22%,
which means that if the result would change, increasing the cash flows of the companies by 4%,
the difference between the value of the companies is 21%, m 22%.
eadjustment and replacement of machinery to use the new sion polymer

COMPARATIVE in 2,022
for material change WIT
SIN SECTOR
H Diff
2,018 2,019 2,020 2,021 2,022 2,022 2,022
1,817 2,804 4,241 6,025 8,328 6,561 1,766 POSITIVE
1.47 1.68 1.98 2.32 2.74 2.42 0.31 1.3
1.31 1.53 1.83 2.17 2.59 2.24 0.34 1.1
0.64 0.85 1.15 1.48 1.89 1.52 0.37 0.1

2.08 2.31 2.63 3.08 3.74 3.09 0.65 1.33

48.0% 43.3% 38.0% 32.5% 26.7% 32.4% -5.64 p.p 75%
52.0% 56.7% 62.0% 67.5% 73.3% 67.6% 5.64 p.p 25%
4.19 5.06 7.73 11.11 18.16 15.34 2.82 4.0

7.48% 7.91% 10.13% 11.54% 13.74% 12.96% 0.78 11%

9.1% 10.1% 12.1% 13.0% 15.0% 10.8% 4.18 p.p n.d
0.83 0.78 0.84 0.88 0.92 1.20 -0.28 n.d
7.72% 7.81% 9.84% 10.63% 12.01% 11.52% 0.48 17.3%
80.61% 64.06% 48.73% 35.05% 23.32% 0.27 -0.03 p.p 2

7.0% 8.1% 10.4% 11.2% 12.8% 12.2% 0.55 p.p 18.0%

2,018 2,019 2,020 2,021 2,022

6% 6% 6% 6% 6% same assumptions as in SIN
54% 54% 55% 55% 56%

22222
84.00 86.00 88.00 90.00 92.00
2.44% 2.38% 2.33% 2.27% 2.22%
1.5% 1.5% 1.5% 1.5% 1.5%
2% 2% 2% 2% 2%
4.0% 4.0% 4.0% 4.0% 4.0%
25% 25% 25% 25% 25%

2,018 2,019 2,020 2,021 2,022

15,730 16,674 17,675 18,735 19,859
 7,236 7,670 7,954 8,431 8,738
8,494 9,004 9,721 10,304 11,121
1,969 2,046 2,125 2,206 2,289
2,601 2,653 2,706 2,760 2,815
3,925 4,305 4,890 5,338 6,017
2,500 2,625 2,756 2,894 3,038
1,425 1,681 2,134 2,445 2,979
340 332 276 220 164
1,085 1,349 1,858 2,225 2,815
271 337 465 556 704
814 1,011 1,394 1,669 2,111

2,018 2,019 2,020 2,021 2,022

7.48% 7.91% 10.13% 11.54% 13.74%

4.0% 4.0% 4.0% 4.0% 4.0%
3.48% 3.91% 6.13% 7.54% 9.74%
0.81 0.64 0.49 0.35 0.23
2.81% 2.50% 2.99% 2.64% 2.27%
10.29% 10.41% 13.12% 14.18% 16.01%
25% 25% 25% 25% 25%
7.72% 7.81% 9.84% 10.63% 12.01%
7.72% 7.81% 9.84% 10.63% 12.01%
6.99% 8.12% 10.35% 11.23% 12.78%

The IRR of 15% will be

We have

2021 2022
703 728
3,123 3,310
3,152 3,394
 673 644
-21 -29

2021 2022
796 844
3,123 3,310
3,351 3,609
568 545
-21 -23

a rate of

of the company would have and

e each company.
 WORK TO BE PERFORMED AT METALTEC
1. Present the figures of the Strategic Plan HAVING BEEN INVESTED.
2. Calculate the Ratios for the period
3. Answer QUESTIONS to RESOLVE
4. Investment Recommendation
5. Commentary on the investment to be made based on the appraisals
re
6. Management mechanisms on which to act in order to improve
profitability.

ISSUES TO BE RESOLVED Mark with an X the most accurate

statement.
Liquidity:
Liquidity is scarce, there may be problems to meet payments
The liquidity is sufficient to cover payments.
The liquidity is excessive, and the potential for profitability is being lost
Solvency/Risk:
Solvency is much higher than the sector, which does not seem to be going
bi Solvency is lower than if the investment had not been made
Consequence of lower indebtedness solvency is higher Indebtedness:
Low debt means minimal interest and excessive IQ
Debt is very scarce and does not allow leverage to work It is preferable to
have less debt
Economic Return on Investment (ROI)
Distances itself from the industry average
Higher than WITHOUT investment due to lower turnover
Increasing sales would increase the ROI by increasing turnover Financial
Profitability: (ROE)
Financial Profitability is lower than the sector because the sea is small
Financial Profitability is lower than Economic Profitability because the sea
is small Financial Profitability is lower than Economic Profitability because
the sea is small Financial Profitability is lower than Economic Profitability
because the sea is small
To have such a high RF, the sector must have had outliers.

FREE TEXT: Management mechanisms on which to act for improvement

Increase sales volume
Reduce cost of sales
Reduce the direct cost of production
Acquire discount on raw materials
Obtain financing through financial debt
Decrease capital increases
H II
ized
Financial

METALTECH
RF