In this second part, M. Thesmar goes through the definition of operating capital, and takes the opportunity to discuss an example. He then mentions the capital employed. He then warns on the difficulties related to some calculations: equity, debt and fixed assets. Surprisingly enough, it's not that trivial...

After defining financial analysis, M. Thesmar gives some insights about the way it is possible to perform such an analysis. He then mentions some references, and makes some reminders about the 3 basic kinds of financial statements : the Cash Flow statement, the income statement and the balance sheet. He then explains how it is possible to retreat the balance sheet in order to make it more representative of the situation of the firm. He gives an example of this process.

Is the firm able to repay it's debt? That the main question this third step addresses. M. Thesmar introduces here solvability and liquidity. He explains how the cash flow statement can be used in this scope. He defines the decrease in net debt and presents the cash flow statement of Danone. Then, important ratios are presented, enabling the analyst to judge the solvability and the liquidity of the company.

M. Thesmar goes over to the second step on his financial analysis methodology, entitled 'investment analysi'. The objective is here to understand where the money used to make investments comes from. In this scope, he introduces the notion of working capital, mentions some related ratios and goes over the example of a major French retailer : Carrefour.

M. Thesmar introduces here a 4 step method whose role is to give a structure to your financial analysis process. Here, he introduces the first step, entitled 'Value Creatio'. He insists on the importance of understanding the trends in EBITDA, explains the scissors effect and the breakeven point. Finally, the operating leverage is addressed with the use of an example.

In this video, M. Thesmar gives different examples showing that important conflicts between shareholders and debt holders can arise and illustrating the principle of the cash in and run technique.

In this video, M. Thesmar gives different examples showing that important conflicts between shareholders and debt holders can arise and illustrating the principle of the cash in and run technique.

In this video, M. Thesmar gives different examples showing that important conflicts between shareholders and debt holders can arise and illustrating the principle of the cash in and run technique.