The nature of the non-current asset base
PPE, intangibles, investments in equity-accounted entities, deferred tax assets, investment property, and financial assets
Understanding the basis of the non-current asset valuations
- Potential impairments versus hidden asset value
- Could non-current assets be liquidated for debt repayment?
Replacement and expansionary capex
Understanding the firm’s capital intensity and operating leverage
Are equity-accounted entities significant?
- Are they a credit positive or credit negative for the group?
Focus on intangibles
- Basis of valuation and are they over-valued?
- Are key intangible assets not included in the BS?
The nature of the current asset base
- Cash and equivalents, restricted and unavailable cash, receivables, contract assets, accruals, inventories and other
The nature of the current liabilities
- Short-term debt, trade and other payables, contract liabilities, accruals, derivatives, provisions
Working capital:
- Defining working capital
- The cash investments in and risks of the net working capital
- The working capital cycle
- Linking the working capital cycle to liquidity and cash flow
- Funding net working capital
Long-term non-equity liabilities
- Bank debt, bonds, private placements, leases, uni-tranche funding, hybrids, etc
- Deferred tax liabilities, provisions, retiree benefit deficits, derivatives
- Deriving a comprehensive calculation of gross and net debt
Off-balance sheet liabilities
- Non-IFRS 16 leases, contingent liabilities, securitised receivables
Liquidity analysis
The book equity base
- Is the book value of equity important? What does it tell us?
- Market value of equity versus book value of equity
- Is negative book equity a problem?
Where are the credit risks in the balance sheet?

CASE STUDY - Working out adjusted gross and net debt; calculating and interpreting key ratios including leverage, net working capital, ROCE/ROIC, and liquidity.

Day One - Quantitative Assessment